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How to Make Money Without a Job

Friday, November 4th, 2005 by Steve Pavlina

Download MP3: income.mp3

In today's podcast, I'm going to talk to you about how to make money without having a job. So first let me share some background information:

When I was 20 years old, I had my first and only job, which was working in retail sales in a retail store for about six dollars an hour. And it only took me six months of working at that job to realize that I had no interest at all in being an employee ever again. I just never liked the idea of putting someone else in control of my time, and that was over thirteen years ago. I haven't had a job since.

So for moving onward from that point, obviously I had to find a way to make money and support myself — and eventually my family — without making income as an employee. After that first job, I moved on to doing some contract programming work, and within a year after that I started my own computer game development company. That I enjoyed much better than having a job, but I was still basically trading my time for money, so I went from being an employee to being self-employed.

Years later, I came up with a different paradigm that I'd learned, and that was instead of thinking of yourself as self-employed, think of yourself as a business owner. That's when I restructured my business to focus on creating more freedom for myself instead of trying to directly earn money. So my goal at that point became to put my income on autopilot as much as possible. Instead of trying to make more and more money, I set about trying to make a decent income in a way that required less and less of my time. That worked extremely well. Eventually I got it down so I could meet my expenses while being required to work — I think probably an hour or two a week, is what it came out to be. My standard of living was very comfortable doing that. So obviously getting to that point gave me incredible freedom because I didn't have to spend so much of my time working. I was able to spend the bulk of my time doing what I really wanted to do, whether or not it made money. For me, this meant spending a lot of my time working on my own personal development — which was something I was really passionate about.

So today I have the priviledge of working only when I want to work, and I'm free to take on interesting projects regardless of whether or not they're profitable. I get to spend time — maybe even weeks at a time — working on projects I'm interested in, whether or not they generate money. So my work is no longer something I primarily think about as a way to make money. Instead of working for money, I think about my work as a way to express who I am and as a way to grow.

So how can you reach this point if this is something you want for yourself as well? The key point for me was to realize that instead of working for money directly, I would spend my time setting up systems and processes that would earn money for me. That way I would continue to make money while I slept, was on vacation, and so on. The whole idea is to decouple your time from your income, so you're not spending your time to make money. Instead you're spending your time to set up systems that will then run for you independently of your time, and those systems will generate your income.

Part of the reason I did this is that I found getting a job was just too risky a way to make money. That probably sounds very ironic because people often think of starting your own business as very high risk. Really, it's just the exact opposite though. If you run your own business — or if you create other streams of money that aren't based on having a job — you can't get fired, you can't get laid off. You see, when you have a job, you have a limited downside perhaps, but you also have a limited upside because if you have to spend so much of your time working for money — like full-time, say, fourty hours a week or more — you're going to miss way too many opportunities because you're spending too much of your time working to make money. So I think it's far riskier in the long-run to miss so many of these opportunities than it is to worry about going broke. I've gone broke before. It's really no big deal. You deal with it, you start fresh, and you move on.

A job actually offers even less protection against being broke because of the fact that you can get fired, or laid off through no fault of your own. Somebody can just come and turn off your income. Whereas, if you set up multiple streams of income through a variety of sources, some major catastrophe would have to happen to really make you go broke. If one's income source has a problem and gets turned off through no fault of your own, you can pick up the slack through the other income sources.

So, what's the process you go through to do this? The whole idea is about creating streams of income. Streams of income where you set up a little system that runs for you and generates income a little later on. I'll give you some examples of how to do this. The basic idea is to try something, try anything. Try an affiliate program, try setting up a little website as a way to make money. Work from whatever you find is your own strength, and if it works — if you find something works, generates a little income on the side — keep it. If it doesn't work that well, keep it small and don't really invest much more time into it. Or if it really doesn't work at all, just dump it and try something else instead.

You have to get past this fear of failure thing because, with this model, failure is very common. You're just going to go through one failure to the next, to the next, to the next — and eventually you have a little success. I've tried many streams of income that have just utterly failed. One example of this is trying to sell T-shirts on my game site. Many people try this, and I find very few people make much money from it, because the profit margine is much too small. So that was a project I tried for a month, and then I dumped it and moved on to something else. An affiliate programs is something that makes me very little money but I still keep it because it's free money and it doesn't take very much effort to maintain. Maybe I can buy a nice dinner when the cheque arrives.

So these streams of income are dynamic. With one idea, another one is born. You're constantly trying new ones. Think of it like the "ready, fire, aim" approach, as opposed to "ready, aim, fire. So you just try something, you get ready, you fire — you try it. If it works, you adjust it and you tweak it, and you try to improve it. If it doesn't work, you drop it and you fire again. Try something else.

So with every stream of income you start very, very small. You might just try to make an extra ten dollars a month — one little thing you can do. Ten dollars a month. You might think that's very small and that's negligible, but if you can get to ten dollars a month then you can probably find a way to turn it into twenty dollars a month. If you can make twenty dollars a month, you can probably find a way to turn it into fifty dollars a month, and from there you can probably get to one hundred, two hundred, five hundred, one thousand, and so on... and keep going up from there. Just to get one stream making ten dollars a month is actually a really good thing if you can get to that point, because it's the seed that you can grow.

So the way to do this, really, is through the process of leverage. There's leveraging other people's time, leveraging other people's money...but my favorite form of leverage happens to be leveraging technology. So the idea is you want to work from whatever your strength is. I don't have a strength in real estate investing, or stock market investing, or even so much in general business in terms of building a business to sell it to some larger entity.Those aren't my particular strengths, but I'm very well versed and skilled in technology. I have a background in computer programming. I learned to program when I was ten-years-old. I'm very comfortable with computers. I know a dozen different programming languages. I have a degree in computer science and another degree in mathematics. So that is my personal strength, that was my background.

How do you find your strength? You follow your passion. Whatever your passion is, develop it into a competency. This may take a lot of time, this may take years. But if you have a passion, there's an indication there that it's something that can develop into a compentency. For example, you may be really passionate about music, but it may take a long time to develop that into a compentency. However, when you do that, now you can use your compentency as your strength to get into creating these passive streams of income. So, find a way to provide lots of value through leverage. For example, by leveraging internet technology, I can take one hour to write an article, and then post it on my website. And it will be read by thousands and thousands of people around the world. I have articles that I've written back in 1999 that are still online and people are still reading them. This is a great way to provide value for virtually no cost. It's all about providing value.

So, what are some other ways you can provide value? Some of the other processes I've set up and used are direct sales. For example, I created some intellectual property, which, originally for me, was some computer games, and I sold them over the internet in a downloadable form. I spent a lot of time developing on automated sales. So somebody comes to the website, downloads a free demo — the demo would give them some free play.Then they would hopefully come back to the website. A certain percentage of people would come back to the website and buy the full version and download it immediately too, or order it on CD and it would be shipped to them later. So that entire process was largely automated. It didn't require a lot of human intervention at all. There was a webserver that was just handling all the parts of it — the download, the sale, the fulfillment of the order, and so on. So by taking a period of weeks to set up that system — then it's just running on autopilot, year after year after year — the money gets charged to peoples' credit cards, then the money gets deposited into my bank account automatically. So there's a lot of upfront investment here, to create the intellectual property, to create the sales system. But after that, you're on autopilot.

Another way I've made money before is licensing products from other people to sell. Once you have the sales system developed, you leverage it further by plugging other people's products into it. I would go to other developers of games, license their games and sell them through my own website, and split the profits with them. On the other hand I would also take the games that I've developed and license them to publishers — and then get a stream of royalties. I'm still getting royalty cheques in the mail from things that I've done in the year 2000 — which is kind of nice because, month after month, I just keep getting more cheques in the mail.

As I've mentioned before, affiliate programs — those haven't really done too much for me. One thing that has really been beneficial has been the whole idea of building a high-traffic website. When you build a high-traffic website, you can do so many things with it. You can sell products through it which you don't even have to own. You can license products from other people. You can sell advertising. Just for an example, from advertising I'm making thousands of dollars a month already doing this on, and I only started the site thirteen months ago. I did this largely by joining the Google Adsense Adwords Network, and then moving on from there. The nice thing about the Adsense program is they do virtually all the work. They sign up the advertisers, they take care of everything, and then you get a commission for every ad that someone clicks on. It takes less than an hour to set it up and get started with it, so it's a very high leverage thing once you've laid the ground work to build up a website.

Another thing is to network with other people who are doing a similiar kind of thing, who have the same type of mindset of looking for passive income. You'll find all kinds of creative deals to be struck. Often times you'll be able find some kind of association that's related to what you're doing if you're in a specific line of work. You'll find more people who are interested in working out deals. That's where you can find somebody who has products that you might be able to sell on your website. You can do sort of a partnership agreement where you sell their products on your website and they sell your products on their website. I've done quite a few deals like that, and they work out usually pretty well. And again, don't worry about failure. Fail a lot — especially when there's no downside. Experiment like crazy, but focus first and foremost on providing value. In order to provide that value, like I said, you have to develop the skill. You have to take the time to develop some talent or skill that you can leverage, again, and again, and again. With technology, it can be some certain type of knowledge. It can be the ability to create some type of property — intellectual property, like music, or artwork, or so on, or information products. But once you have a way of providing that value and delivering it, it's not too hard to come up with a system. Obviously you have to spend some time learning this, but really, if you're serious about it, it's worth investing months of your time to figure this out.

This is obviously way beyond the scope of what I can tell you about how to do in a podcast right now. I mean, it took me many years to figure out how to do all these little things online. I've been doing this since, you know, I launched my first business back in 1994 — and I was online in 1995 and have been ever since then. So you know, I have ten years of doing this, but when you keep at it and keep at it and keep at it — and simply just don't give up — you will eventually figure things out. You will eventually figure out how to get it working. So, if you want to make money without having a job, it is definitely possible. I've been doing it most of my adult life, but you do need to lay the ground work first. Figure out what your passionate about and turn it into strength, and then find a way to leverage that strength. If you don't know what you're passionate about, that's a very common problem — especially when you're young, in your early twenties. Just take your time to find out. Try lots of different things. Experiment. When you do find out what you're passionate about, and you have an idea of what you want to start working on, then start small and bootstrap your way up. Start with a goal to create just ten dollars a month of extra income, and once you've done that, set a goal to turn it into twenty-five dollars a month. Then move to fifty, and one hundred, and so on. And pretty soon you'll be setting a goal to go, from say, seven hundred dollars a month to a thousand dollars a month — then to two thousand dollars a month, then to five thousand dollars a month. It may not be that long before you're thinking, 'Wow, I can actually quit my day job!'

The first month that generated any income for me was February of this year — and I launched the site originally in October of last year, October of 2004. Nine months ago was the first month it generated any income at all, and it only made fifty-three dollars that month, and that was just entirely from Google Adsense ads. But the next month it past one hundred dollars, and a few months later it was already passing one thousand dollars, and so on. And it's continuing to go up from there. It's the exact same pattern I saw with my games business, although in this case, it's happening a little bit faster because now I have a better sense of what I'm doing. It's really this process of continuing to experiment and tweaking these existing streams of income, and adding new streams. If something doesn't work, dump it and try something else. If something does work, find a way to do more of it. It sounds like common sense, right? It is. It is common sense. So go out and do it. Celebrate your small victories. If you can create a stream of ten dollars a month of passive income, that is a wonderful, wonderful step to be at. From there, like I said, you can eventually get to twenty dollars a month, then you can eventually get to a thousand dollars a month, five thousand dollars a month, and so on. When you reach that point of having your passive income be enough to support yourself — or your family — that's when you're in a really good situation, because you'll be able to free yourself from having to spend so much time working for money. Then you can spend the bulk of your time having a life instead of working so hard just to pay the bills.

So until next time, live conciously.