Disclaimer: This is not financial advice; it is just my opinion.

Motivation

Jump to money-making methods using the table of contents above.

Whether we like it or not, money is an integral part of modern society. The amount of money you have is pretty much directly tied to how much material stuff you can get. Food, water, transportation, technology, experiences like concerts or golf classes, a car, a house… without a stable financial situation, it becomes nearly impossible to get the things you want in life. It’s important to note that money isn’t everything - people are the only ones that truly matter in this world. But since we’ve collectively decided to use money for access to goods and services, having enough money is essential to live a stable life.

There is an argument to be made for focusing too much on money. More money isn’t always better - it can make you lose touch with reality and cause all sorts of social issues. Not to mention the fact that we’re all hardwired to want more, so you’d never stop wanting more money / material things. I’d argue that making enough money to comfortably live a middle-class life - with the ability to travel, experience new things, buy all the non-luxury stuff you want, and handle emergencies when needed - is enough.

Warning, kinda controversial take: Honestly, it’s a waste of your life to focus on trying to make more money past the middle/upper class boundary. Instead, focus on developing social relationships and other non-material things. The hard truth is that “make as much money as possible” is a fucked up life goal, because you’ll never be satisfied, no matter how many Rolex watches you own.

Perspective

Some shower thoughts to help you get a better perspective on money, what it means, and how it works.

Money is Fragile

Money only has value because society says it does. The huge body of people in the U.S., by using money in everyday life, collectively accept it as a universal currency to trade goods.

As a result, the value of money can be very fragile. The average inflation rate in the U.S. in the past 60 years was 3.8% per year. This means the effective value (purchasing power) of your money actually goes down over time! Also, if a country collapses or has major financial issues, your owned money could become worthless. Zimbabwe had to print bills worth 100 trillion dollars each. Now imagine if you were, say, a billionaire in Zimbabwe before that. Ouch.

A Thought Experiment

Here’s a thought experiment. Say a fancy meal costs about $100 USD right now. Assuming an inflation rate of 3.8% per year, this table shows how much the meal would cost in each year (calculator):

Year	Cost
2023	$100
2033	$145
2043	$211
2053	$306
2063	$445

Say you have $100 USD right now. If you let that money sit idle, generating little to no income, it will actually decrease in purchasing power. In 2063, you’d need about 4.5 times that amount to get the same quality meal! (Of course, that’s assuming the inflation rate stays the same and nothing major happens. Which, given historical timelines, definitely won’t be the case.)

So, when thinking about income, think in terms of purchasing power, not raw numbers. This is how much your money would actually be worth in current-day amounts, adjusting for inflation.

Example: Lottery - Lump Sum vs. Yearly Payments

One commonly used example to cement this new perspective. See this article for a decent analysis. Keeping inflation in mind makes it easier to see why yearly payments “seem” much higher than the lump sum at first; lottery companies aren’t dumb after all.

Flat Income vs. Compound Interest

To cut to the chase: Compound interest can be powerful, but flat incomes are just as important! A flat salary comes first, giving the principal needed for compound interest to do its thing. Or just do both together - why not? When you’re considering compound interest, remember: You’re trying to outpace inflation, otherwise the actual value of your money will go down! And inflation rates of different countries vary - keep this in mind before doing any sus stuff.

Note: In a way, pay “raises” are just manually offsetting inflation rates. Money is just a tool in the economy - if every business owner raises their workers’ pay, then prices will go up to offset the newfound demand. This actually applies to most flat rates. Economists think of money as a signal to everyone else. Signals only gain relative strength when they’re compared with each other. The relative amount is what counts, not the absolute value.

Not a Zero-Sum Game

Everyone can make more money and get their needs met. Why? Although earning money necessarily means taking money away from someone else, the real-life value of money is actually logarithmic. Basically, the same flat $10,000 could make a huge difference to someone with next to no money, but it’s almost meaningless to a billionaire. So, rich giving money to the poor in exchange for goods can be a win-win: The poor get a meaningful amount of money, while the rich get useful goods while losing a negligible amount of money.

In addition, when we think about competing with each other, we typically think in terms of our local area - say, when considering jobs in the U.S., we don’t really care what happens in a place like Europe. Kinda harsh, but even if the game is near zero-sum, it’s likely going to be a win for the U.S. and a loss for Europe/other countries if you work together with friends and coworkers.

So: Team up with people! You will all benefit. To be a bit cringe, teamwork really does make the dream work. Ok, I regret writing that already…

Phew. Ok. With all that out of the way, how do you actually make money?

Money-Making Categories

To make this huge topic easier to think about, let’s split the ways of making (or saving!) money into subcategories. Or well, maybe more like the key points to focus on for each “method” of making money.

Passive vs. Active Income

AKA how much of your day-to-day life do you need to spend to make this income source work / keep it up to date? These aren’t really distinct categories though - it’s more of a sliding scale between “(almost) no maintenance required” to “full time job”.

Low vs. High Risk

Is there a possibility that you might lose your initial investment? How high is it - what are the chances of good or bad outcomes? This doesn’t just apply to investments! Jobs could give you pay raises, but it’s not guaranteed, and you could be fired due to a bunch of reasons, some of which are out of your control (risky). Banks could change their interest rates. Inflation can and will change the actual purchasing power of things like bonds (similar to long term loans), even turning them into huge losses. Again, this is a sliding scale between “guaranteed payout amount” to “literal gambling”.

Keep in mind that the world changes quite often, with new trends popping up all the time. It’s kinda sad to think about, but it is important: If your world turned upside down within the next few years, would your finances be fine? Could you focus on grieving and/or other non-money related things without being stressed?

Flat vs. Compound Earnings

We’ve all heard about the “power of compound interest”. And it’s true! At least to some extent. Earning $1,000 vs. 1% extra per year - depending on how much time/money you need to put into these options, one could be much better than the other. (Starting with $100,000 would make both options equal in this example, but lower/higher amounts would favor one of them.)

Taxes

Some income methods are taxed more heavily than others. Some have deductibles or subsidies - these are money incentives designed by governments to encourage people to do certain things, typically stuff that the government wants you to do. For example, there are many deductions specifically for businesses, such as a business property deduction, since businesses are good for the economy.

Upfront Time/Money Investment

Is something easy or hard to set up? Will it take a long time to learn the necessary skills or get the business up and running? This includes the 4+ year time investment needed to get a college diploma! Is an upfront investment required, and if so, how much? It takes little to no money to buy a website, but a lot to buy a house! These are important factors to consider here.

Room for Growth

How does the amount of time/money you spend on a method correlate with the outcome? Is it linear (eg: savings accounts, where putting 2x the money in gives you 2x the profit)? Constant (eg: you can only save some much when taking advantage of coupons)? Something else (eg: more effort working a job could lead to varied pay raises)? Clearly, this is quite important, especially when considering

Legitimacy

Is this method mainstream (eg: holding a job, buying stocks, running a business)? Is it niche (eg: answering surveys online, intentionally buying and reselling items on eBay)? Is it shady (eg: taking advantage of opportunities in foreign countries, tech scammers, selling a fake product)? This has a tangible effect on how willing you’d be to go through with various methods.

Do you want to do it?

It’s not all about the money! Consider whether certain money-making methods align with your interests and values. Also, some methods are objectively more fun than others (think data entry versus streaming on Twitch). These have real effects on which methods you should consider - in fact, your desire/motivation to do certain things is more important than most of the other stuff on this list!

Methods

Later… (WIP)

Links to research

https://www.nerdwallet.com/article/investing/what-to-do-with-extra-money

https://www.businessinsider.com/personal-finance/what-to-do-with-savings

https://www.investopedia.com/financial-edge/0812/smartest-things-to-do-with-10000-of-savings.aspx

https://www.bankrate.com/banking/savings/places-to-save-your-extra-money/

https://www.clevergirlfinance.com/blog/what-to-do-with-savings/

Last updated: 04 April 2023

Back to previous page