“Cut expenses or generate passive income?”. This is a question that is often asked by people who are starting to fix their personal finances.
The thing to remember is, financial planning has never been something that can be described as one size fits all. This means that a plan that is suitable for A may not necessarily be suitable if it is implemented by B and so on.
‘Many roads lead to Rome’, as the saying goes.
Financial planning is a long journey to be able to achieve a goal called financial freedom. There is no absolute answer that can quickly get you to that final destination.
Given that each available road has its own characteristics, knowing what your type is can be the first step in determining how you will design your trip.
|Illustration. Photo by : Pixabay|
Cutting Expenditures Doesn’t Mean Being Poor
In this day and age, needs and wants seem to be only separated by a thin thread that is often invisible.
Lunch is a necessity, but every day having lunch at a restaurant or ordering food delivery is also a necessity, right?
Cell phones are necessities. But changing a cell phone every time a new type is released is it a necessity too?
Separating expenses that are needs and wants is sometimes difficult, especially if we are too used to a wasteful lifestyle. But that doesn’t mean you can’t do it.
As a beginner, you can follow the steps below.
Record All Expenses
Before starting to reduce expenses, it’s a good idea to note where your money is usually spent or spent. Starting from routine expenses to the smallest expenses such as parking fees.
Keeping track of all expenses later will give you a big picture of how your character treats money by showing which items are draining you the most money.
Get acquainted with the budgeting system
A budgeting system is a system that requires you to plan your expenses from the start.
With a budgeting system you already know for what purposes the money is spent. By doing budgeting, the possibility of you spending money for non-urgent needs can be minimized.
When you are familiar with the budgeting system, you will increasingly understand which expenses are needs and wants. When you meet expenses that are still inflated, there you can start looking for other alternatives to save money.
For example, after budgeting you realize that the cost of your lunch each month is very large because you are used to eating out or ordering food. This can be anticipated by starting to bring supplies from home.
Have Additional Income by Generating Passive Income
What to do if you have saved money but still don’t cover your monthly expenses? Or what if you’re not the kind of person who has a hard time saving money?
If it’s like this, you can try to start looking for side income or passive income.
Passive income can be obtained by doing simple activities to things that sound complicated. There are many ways to have passive income. The following are examples of activities that you can do to get passive income.
1. Publishing Your Own Work
If you have the ability to write songs, make comics, make podcasts, photography, or write novels, these can be used to earn extra income.
Starting from publishing it physically (such as an album or book) or online. Currently, there are quite a number of paid applications and websites that give royalties to the original creators of the works published through their applications and websites.
2. Adsense Youtube and Blogs
Making money through Youtube is booming in recent years. Google specifically provides space for content creators, both on Youtube and Blogspot, to make money by inserting ads on their videos or blogs.
To be able to make money through AdSense, you first need to register your Youtube and Blog accounts.
3. Selling Unused Items
Instead of just piling up dust, it’s better to sell things that are no longer used! You can sell it through the marketplace or by opening a garage sale in front of your house. In addition to getting extra money, you have also contributed well to the environment, you know, because you minimize the amount of waste.
Endorsement is a marketing technique that is widely used by business owners to market their products with the help of well-known influencers. For those of you who have a large number of followers on social media like Instagram, surely you will be familiar with endorsements.
You can earn money by promoting a product on your social media accounts.
Apart from those mentioned above, there are many other things that can be used as a source to generate passive income, such as renting out property, vehicles, filling out online questionnaires, doing a dropshipping system, and opening a business.
Hopefully the above information can be useful for all of you.