Cutting back your spending isn’t the only way to save more. Finding ways to up your income can help you build wealth and hit your goals faster—and it doesn’t have to require a lot of time or effort. You can ask for a raise, pick up a side gig (as nearly a third of U.S. workers are doing now) or consider a third powerful income-boosting strategy.
Say hello to passive income —a low-effort cash flow that’s steady, predictable and relatively easy to maintain. Here’s how four people have done it successfully.
Bob Lai, 35, tech product manager and blogger in Vancouver, Canada
"High-dividend stocks are my secret weapon, netting me more than $1,200 in passive income every month with virtually no effort. Basically, this means that I've invested in stocks that pay dividends to shareholders, so I essentially get a cut of each company's profits every quarter—100 percent of which I reinvest. This lets me buy more shares without having to shell out more money, which is a huge benefit when the price ticks up.
My strategy did require some initial effort. But while thoroughly evaluating investments—by checking out price-to-earnings ratios, historical dividend growth and company statements—before purchasing may seem like an intimidating task, I actually enjoy it and don't mind immersing myself in the research.
That said, only investing in dividend stocks can be risky, which is why this is only one part of my overall strategy. I also invest in index ETFs, which are comprised of shares of many different companies and trade just like stocks, to keep my portfolio balanced. Diversification is the name of the game here.
Why am I so focused? Within the next 10 years, the goal is for my passive income to be equal to or greater than my expenses. This is how I define financial independence, and my dividend portfolio is getting me closer to the finish line."
Cat Coquillette, 30, location-independent illustrator and designer in Chiang Mai, Thailand
"Thanks to some solid passive income streams, which make up about 90 percent of my monthly earnings, I'm anything but a starving artist.
In addition to my illustration and design business, I earn about $7,000 a month via art licensing through print-on-demand companies. These are websites that print your artwork on things like apparel, phone cases and notebooks, then sell the items online. For example, I created a design for a travel mug that sells for $24.99; I get 10 percent of each sale. This may not sound like much, but it adds up, especially when you submit a lot of designs. I upload paintings both new and old, so instead of collecting dust, my artwork can earn some cash.
Traditional art licensing is another reliable money-maker, netting me about $2,000 monthly. I do this through art licensing companies and directly with consumer-facing brands, then get a royalty rate based on the sales. Finally, I bring in about $1,000 each month teaching online tutorials.
These passive income sources—which req uire very little maintenance aside from some social media promotion—allow me to invest for the future and in what I love doing today: traveling the world and painting new pieces for my portfolio."
Corey Fick, 30, nonprofit director of operations and blogger in Boston, Mass.
"When my wife Jessica and I purchased our first home in 2014, it came with one huge perk: two off-street parking spaces—an in-demand commodity in our Boston neighborhood. Since we're a single-car family, we leveraged the additional spot to bring in some passive income.
Renting it out puts $200 in our pockets each month, which almost fully covers our homeowner association fees. Honestly, it feels like free money. The only maintenance expense is snow removal, which has never exceeded $250 a year for both parking spaces.
The only time we really 'lose' money is during periods when we don't have someone renting the spot. To prevent this, we avoid month-to-month agreements and are proactive marketers. Before a rental agreement expires, for example, we list the space on a few local websites to begin vetting new renters. This helps us create a list of prospective tenants, which expedites the whole process so that the space doesn't go unused.
All in all, I couldn't think of an easier way to make $2,400 per year!"
Netiva Heard, 38, financial educator in Harrisburg, N.C.
"My husband Malcom and I currently own seven single-family homes in Illinois and Indiana—netting us just under $6,500 per month after taxes, maintenance and insurance costs.
Being a landlord isn't super time intensive, but it does require some attention since we manage the two properties in Illinois. (A family member manages the others.) If a pipe breaks or a water heater gives out, the responsibility is ours. Before moving to North Carolina two months ago, we deliberately built up a solid team of affordable electricians, plumbers, roofing specialists and contractors. If something comes up, we'll be prepared to handle it.
We bought our first property back in 2011, when I was working as a Realtor. Our strategy has been to invest strictly in foreclosures and pay in cash—so far anywhere from $19,000 to $35,000 per property—so we never take on mortgages.
This was no easy feat! In September 2009, we began reducing our expenses and saving my entire income so that we could tap our savings to purchase the homes. We first used rental income to replenish our savings, and now invest the profits into other real estate projects, our retirement and kids' college funds.
Establishing this kind of passive income takes time—and a hefty financial commitment, at least at first—but since we had a solid emergency fund and no debt to our name, it made sense for us. My best piece of advice is to get as financially fit as possible before jumping into the rental property game.