Recession Tips – How To Save Money Now

In today’s world, there is no such thing as job security. That is why you need to diversify your sources of income. Even if you own your own business, it is important to generate income from more than one source.

Just think about it. There have been nearly a million US layoffs in 2009 alone. Many of these people received no severance pay, no skills training, or anything else that would ease the transition into a new career. To put it bluntly, they are screwed. Had they invested in themselves and worked hard to create multiple income streams, the pain of a layoff would not have been as acute.

The harsh reality of today’s business world is that we cannot “trust” our employers to “take care of us”. For the most part, they will accept your labor and pay you a fair wage. Anything more is highly unlikely, no matter what kinds of promises you are given.

In addition, the old model of hourly wages is a losing game. Because of technology and innovation, many of the jobs that had previously been paid a high hourly wage (like auto workers for instance) can be automated or done more cheaply abroad. The focus needs to be on results and value creation. If you can create more value in one hour than someone can create in 100 hours, you can and should be paid more for that one hour than the other person is paid for 100 hours. I realize this is offensive to some people but times have changed and the only way to ensure your own security is to adapt to the changes.

Even if you own your own business, you should be developing more than one revenue source. Imagine if you were the top seller of Widget A and some innovation came along that made Widget B far more relevant overnight. Your Widget A is suddenly worthless to your previous customers. If your entire business was built around Widget A, you are looking at some hard times ahead. But if you had previously developed a Widget B business, you could shift your focus and your resources to your Widget B division, easing the pain of the Widget A business destruction.

So how do you go about diversifying your income?

Well, it’s easier to do if you work for yourself but everyone (even employees) can and should do it. Here are a few tips:

1. Perform an honest and real inventory of your skills and your ability to create value.

2. Having completed an honest and in-depth skills inventory, take a look at what you are currently doing and look for untapped areas of value creation (i.e. low hanging fruit). For example, if you are knowledgeable in a trade, maybe you could teach a class at night or start a blog about your profession. Or maybe you could write a how-to guide and sell it as an e-book. These things diversify your sources of income within your body of knowledge.

3. Start an automatic investment plan. Use dollar cost averaging and put a fixed percentage of your weekly earnings into an index fund or a bank account. The magic of compound interest will ensure that your invested money works for you day and night.

4. Pay attention to the things you could use to help you in your life. For example, is there some gadget or tool that would make your life a lot easier? Have you looked for it and cannot find anyone selling it? That could be your cue to develop and sell the gadget yourself. I used gadget as an example but it could easily be software, information, or a service.

5. Leverage the information economy. There is no medium that provides greater leverage and lower risk than information services. Contrary to traditional business ventures, creating an income stream in the world of information does not require much of an up-front investment. Spend time on the internet looking at what people are selling and getting paid for. Maybe there is something that you could do better or similarly in another area of focus. What are you currently paying for online? Somewhere, someone is receiving your payment as a source of his income. Why can’t that be you?

6. If you work for someone else, negotiate the ability to “moonlight”. Some employers prohibit their employees from developing alternate income streams. This is nothing more than an attempt to control employees. If your employer does not allow you to develop multiple streams of income, ask him to double your salary and provide you with contractual job security (i.e. you get paid for x years no matter what). Chances are your employer will not want to do this and will acquiesce to your request to diversify your income.

7. If your employer is stubborn and does not want to allow you to work outside of your job with him, you should probably find a new place to work and negotiate a moonlighting provision from the start. But since it is not always feasible to find a new job, you can take advantage of internet privacy features to get yourself started. When registering a domain name, choose the privacy option. Also, don’t use your home phone number or address during any communications related to your new income source. Instead, get a PO box and a virtual voicemail box. (A virtual voicemail box is a unique phone number assigned to you that allows you to record a greeting and have customers leave you messages. It’s cheaper than a cell phone and costs much less.) Don’t use your name in your new email address either. Choose a generic email address like “contact@domain.com” or “support@domain.com”. If you are creative enough, you can keep your information private.

The above tips are just a few ways to get you thinking about diversifying your sources of income. Ultimately, diversifying your sources of income is the only way to achieve any measure of true security in today’s economy.