How to make extra money on the side
I’m going to let you in on a powerful tip — one that has helped me and thousands of others escape boring jobs and live a Rich Life:
But once we understand that our earning potential is LIMITLESS, we can truly start working towards living the life we want TODAY.
One of my favorite tactics to do that is by earning more money on the side.
Even if you have a job you enjoy, there’s really no reason you shouldn’t be making more money on top of that.
In fact, you have so many BETTER reasons to do it:
- Most people don’t even think to earn more — giving you an edge. Because of differences in skill, motivation, and luck, few people ever try to earn more. Instead, they choose to complain about things they can’t control like the economy and taxes while focusing on things like cutting out lattes to save money.
So if you’re in that small group of motivated hustlers who do actually earn more, you earn the lion’s share of side revenue. When you pick an area to excel where there’s a built-in barrier to success — like earning more money on the side — the winners get disproportionate winnings.
- Mitigate your risks. What if you lost your job tomorrow? Would you have another source of income to fall back on? If not, you’re going to have to dip into your emergency fund…if you have one that is.
From reading this site, you know about the importance of diversifying your investments. It’s the same idea when it comes to your revenue sources.
- Managing your money and earning more money is a powerful combination. Combine earning more with the automation strategy for saving, investing, and spending that I outline in my book and you’ll have a powerful financial combination guaranteed to set you up for a Rich Life.
There are plenty of ways to make more money — but one of the easiest, most effective ways to begin generating more income is by starting a side hustle.
What’s a side hustle, you ask?
Simply put, side hustles are freelance businesses that can generate you cash outside of your normal work hours like…
- Graphic designing
- Copywriting and editing
- Web developing and programming
The best part is freelance businesses are easily scalable, so you can make a lot of money if you’re willing to devote just a little bit of time to it. Or if you get busy in other areas of your life, you can scale back.
The 5 steps to make extra money on the side
Step 1: Find a profitable business idea
As mentioned above, finding a profitable business idea is as simple as looking at your strengths. You can do that by answering four simple questions today and finding a side hustle that’s perfect to you.
- What do you already pay for?
We already pay people to do a lot of different things. Can you turn one of those things into your own online business?
Examples: Clean your home, walk your pet, cook you meals, etc.
- What skills do you have?
Now, what do you know — and know well? These are the skills you have that you’re great at — and people want to pay you to teach them.
Examples: Fluency in a foreign language, programming knowledge, cooking skills, etc.
- What do your friends say you’re great at?
I love this question. Not only can it be a nice little ego boost — but it can also be incredibly revealing.
Examples: Workout routines, relationship advice, great fashion sense, etc.
- What do you do on a Saturday morning?
What do you do on a Saturday morning before everyone else is awake? This can be incredibly revealing to what you’re passionate about and what you like to spend your time on.
Examples: Browsing fashion websites, working on your car, reading fitness subreddits, etc.
Find an answer to those questions and I promise you you’ll find a profitable business idea.
Step 2: Use the the Craigslist Penis Effect to find clients
If you’ve never heard of the Craigslist Penis Effect (CPE) before, let me say now that it’s NOT about posting unsolicited and unwanted photos of yourself on Craigslist. That’s an easy way to land yourself on a list you don’t want to be on.
The CPE actually describes situations where everyone else is so horrible that, by being even half-decent, you can dominate everyone else and succeed.
Think of those idiots on Craigslist trying to pick up women in the personals section by sending out a picture of their mediocre manhood. They’d be better served writing a few half-decent responses, testing to see which got the best response, and sending that out instead.
That’s exactly what you can start doing to generate effective leads.
Check out the jobs section of Craigslist and take a look at the ads relevant to your business.
If you took the time to write a great email reaching out to these companies, you’ll immediately separate yourself from 99.9999% of others on the site who are just sending boring boilerplate emails that’ll get them nowhere.
This doesn’t apply to just Craigslist either — you can use this with any job site. The key is to just be slightly better than average and willing to test a few different emails.
Here are a few suggestion of great sites freelancers can use to find business:
- Writers: MediaBistro.com, Upwork.com, FreelanceWritingGigs.com
- Illustrators/Designers: 99designs.com, Designs.net
- Programmers: Toptal.com, Matchist.com
Step 3: Use the 5-line email pitch to qualify your leads
After you find a few good leads on potential clients, you’ll need to craft a pitch that is tailored to their needs and concerns.
In doing so, you’ll want to stress the BENEFITS of working with you — while not giving away too much information as to how you’ll help. I lost my fair share of clients while I was starting out by giving away exactly how I’d help them in my initial reach out. Stupid.
Because I’m a nerd, I’ve developed a 5-line email template you can use to send the perfect email pitch. It includes:
- The introduction: You’re going to want to build rapport by introducing yourself and how you know about the client.
- The offer. Talk about them. What do you want to do for them? Why are you good for that role? You’re going to want to do some research on the organization to see what they need help with.
- The benefit. Walk them through how your work will benefit their company. Are you going to free up more time for them? Are you going to maximize profits by X amount?
- The foot-in-the-door. This is a classic technique that utilizes an old psychology trick to get the client to agree to a small agreement so you can ask for a larger agreement later.
- The call to action. Be clear with this and ask them if they would like to proceed. The call to action is a critical part of this script.
When it’s all put together, it’ll look something like this:
[Introduction] I read your article about X and noticed that you’ve recently started using videos on your website.
[The offer] I’ve been doing video editing for three years and I’d like to offer to help you edit your videos and get them optimized for the web.
[The benefit] That would make them look more professional and load faster, which is important for your readers. And you’d free up time that you could use to create new content.
[The foot-in-the-door] We can discuss the details, of course, but first I wanted to see if this is something you might be interested in.
[The call to action] If so, would it be okay if I sent you a few ideas on how to help?
Step 4: The Tuner Strategy to charge the perfect price
People always get tripped up about pricing, which is why I always hear questions like:
- How much should I be charging?
- Is X amount too little/too much?
- Should I be charging by the hour or per project?
These are questions every freelancer asks when they start out. And while there are no set rules for rates, there are actually a few methods you can use to find one that works for you.
- Drop Three Zeros Method
Simply take your ideal (read: realistic) salary, drop three zeroes from it, and voila, you have your hourly rate!
For example, say you’d really like to earn at least $40,000. Just take the three zeroes from the end and you now have your rate: $40/hour.
- Double your “resentment number”
I love this one because it’s both really interesting and effective. Ask yourself: What’s the lowest rate you’ll work for that’ll leave you resentful of your work?
Say you’ll work for $15/hour at the VERY LEAST. Just double that number so now you’ll earn $30/hour.
- Do what the next guy does This method is incredibly simple: Go to Google and search for the average hourly rate for whatever service you’re providing. You’ll get a good sense of where to start when you’re charging your clients.
The best part is after you start charging your clients, you can start to take on more or less work until you earn the amount you want.
For example, after you earn your first $1,000 it’s incredibly easy to start dialing your prices up and charge even more money from your clients.
Start “tuning” your rates after your first few clients. Were you making $30/hour? Start charging $40 or even $50. There’s no hard and set rule for how much you should charge. Just start tuning until you find a rate you’re happy with.
Step 5: Use the 85% Rule to invest in yourself
When it comes to starting a new business, too many of us will get overwhelmed thinking that we need to do everything “perfectly.” In fact, many will spin their tires doing things like:
- Starting a blog
- Creating a Facebook page
- Buying ads on Google
- Hiring skywriters to promote their business in the skies
This is an easy way to get burnt out, leading us to do nothing at all.
Your goal isn’t to start a blog or create a Facebook page with millions of likes — your goal is to FIND PAYING CLIENTS.
That’s why the easiest way to start freelancing is to take things one step at a time and not worry about getting it perfect.
I’d rather get it 85% right than do nothing at all.
Remember: it’s okay to make mistakes. The important thing is that you get started and learn from those mistakes.
The best way to get started is to begin investing in yourself.
Now, one thing that you will find very common with people who have not taken the time to invest in themselves and learn how this stuff works, is they will create what’s called levels of abstraction.
Rather than just going directly to what they want, they will create all these different levels of abstraction — like making a Facebook page or a blog — that make them feel good, but that actually don’t require them to do the hard work.
So, they’ll spend six, nine, twelve months doing something frustrating and then give up because they never spent time buying a couple good books or buying a course.
That’s why I’d like to offer you somewhere to start: my Earn1k insider’s list.
Join this private list to see the tips, strategies, and techniques you WON’T see on my blog.
Sign up today and get my tested Idea Generator that’ll help you find the perfect freelance business idea.
Ramit, I’m Not Ready to Make Extra Money Cause [Issue]
“But Ramit, I don’t think I can possibly work on a side business. I don’t have enough time and I don’t think I even have a business idea!”
There are always going to be excuses when it comes to trying something new — but when you take a look at some of them, you’ll realize that they’re almost always all MENTAL barriers.
Here’s how you can break past the 3 most common ones I’ve seen.
Mental Barrier #1: I don’t have the time to make extra money!
It’s always funny to me when people tell me they don’t have enough time for their regular job, let alone a freelance business on the side.
Well, I actually have a secret I’d like to tell you that might blow your mind…
…YOU DO HAVE THE TIME!!!
There’s no doubt about it: starting a freelance business will take time — but not nearly as much as you think.
Can you spare an hour a day to freelancing? How about a few hours on the weekends?
I’m guessing that you can. Maybe instead of spending after work time endlessly binging Netflix or browsing Reddit, you can devote yourself to starting a business that can earn you extra thousands this year. Hell, work from a laptop on the couch while streaming; Netflix and Making Money is the new Netflix and Chill.
Saying “I don’t have the time” is really saying “This is not a priority.” Try that out. “Making more money is not a priority.” Compared to “Browsing Facebook is not a priority.” Which one of those is true?
Mental Barrier #2: But I’m so tired after work!
This is actually a very valid concern. After all, many of us work long eight hour days — how are we expected to come home and work on freelancing when all we want to do is pour ourselves some wine and put on the latest episode of The Bachelor (or is that just me..)?
It’s difficult — but you can actually do it successfully with some simple psychology.
Imagine a smoker. Many smokers know that smoking is a bad habit and is terrible for their health — but they still do it because of cognitive dissonance.
What they’ll say is, “Yeah, I know it’s really bad for me but I work really hard and I deserve this pack of cigarettes.”
It’s the same thing as starting an online business. At the end of a long work day, you’ll say to yourself, “I worked all day and dealt with my dumb boss and blah blah blah. I really deserve to kick back and watch Netflix.”
Instead of falling victim to cognitive dissonance, remember this question:
When you look at some successful freelancers who earn hundreds of dollars an hour, many will think, “I’ll never be able to earn that!”
But you WILL as long as you start today. And a year from now, you’ll be earning much more than you would if you didn’t do anything at all.
Mental Barrier #3: I don’t have a good business idea!
This is the most common barrier preventing people from making money freelancing: not knowing what type of work they want to do.
As I’ve outlined in the steps above, though, it’s simple to identify your profitable skills as long as you look at 4 things:
- What do you already pay for?
- What skills do you have?
- What do your friends say you’re great at?
- What do you do on a Saturday morning?
And the answer to this mental barrier will serve as the very first step in creating your side business.
If you’re still stuck, I have a list of 30 proven business ideas to inspire you (or for you to copy).