Multiple income streams: 10 ways to earn extra money

This post comes from partner blog The Dough Roller.

Generating multiple streams of income can have a major impact on your finances. Even an extra income of $500 each month could go a long way to paying down debt or increasing your investments.

We often hear about the importance of diversifying our investments, but diversifying our income streams is just as important, particularly in difficult economic times. Let me show you just how valuable even an extra $500 per month can be. Then I'll list the factors to consider in deciding how to generate extra income, followed by 10 multiple-income-stream ideas.

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The value of a second income

Recently I was discussing with a friend the income I earn online, which now is about $1,500 per month. He asked why I get so excited about this income, given that it is a lot less than I make from my job. Here are several different ways to look at an extra $1,500 per month:

• Savings account. To earn $1,500 a month ($18,000 per year) in a savings account at 4%, you would need to save $450,000.

• Investment account. To earn $18,000 from investments at 10%, you would need to invest $180,000.

• Employment. For many, to get $18,000 in raises could take several years of dedicated service to your employer.

• Financial freedom. Extra income of $1,500 per month could cover car payments, help pay down credit card debt, or cover some or even all of a mortgage payment.

The point is that even relatively small amounts of extra income can go a long way.

What makes for a great source of extra income?

We could all go out and get a second job at Home Depot or Starbucks to earn some extra income. As you might imagine, however, that's not what I have in mind. When assessing how you can generate multiple income streams, consider these factors:

• Flexible. The ideal source of extra income will allow you to call the shots when it comes to your time. Particularly if you have a full-time job, the last thing you want is being tied down to working a set number of hours each week at a second job.

• Scalable. Look for income sources that have at least the possibility of generating substantial amounts of income.

• Sustainable. The ideal extra income source will continue to generate cash even when you're not working at it. The idea is to build something that can eventually function without you.

• Enjoyable. Generating additional sources of income is a lot of work, so you might as well enjoy what you're doing.

• Inexpensive. I don't like income-generating ideas that require massive investment.

10 extra-income ideas

Now we get to some ideas about how to go about generating extra income. You want to choose something that fits your interests and personality. You may have certain skills, training and education that will dictate what's best for you. So while this is not one size fits all, here are 10 extra-income ideas to consider:

Real estate investing. While real estate investing does require some cash upfront, the potential is enormous. And the current downturn in the housing market is an ideal time to buy property. I write a separate real estate investing blog that describes my experience with buying and managing single-family rental properties.

EBay store. It's now easier than ever to run an online eBay store. You can of course acquire products to resell on eBay. But you can also create an online store to market products that others are selling on eBay and share in the commissions generated by the sales. To find more information, check out the eBay Partner Network and the Build a Niche Store sites.

Realtor. This may seem like a crazy time to start selling real estate, but in a slow market a lot of the competition runs away. You'll need an initial investment to obtain your real estate license, but over the long term you'll have the potential to make substantial income.

Web site design. With the continued growth of the Internet, Web site design has become a growing industry. Unless you already have the know-how, you'll need to spend some time learning the technology. But there are plenty of online resources available, and the best in the business can earn a great income.

Graphic artist. There are a lot of ways to generate money through graphics. Just the logo business alone could keep you busy if you have the artistic skills necessary to develop cool graphics.

Virtual assistant. Virtual assistants today can do just about anything for you that doesn't require their physical presence. Many virtual assistants from places like India are working full time for people in the U.S. The best VAs can earn $30 to $50 per hour. The starting place if you are interested is Elance.

Freelance writer. If you have a knack for writing, you can earn great money writing for others. Not sure how to start? Contact bloggers who are always looking for great writing. As blogs grow, they can afford to pay freelancers good money for quality articles. Web sites looking to build links also hire freelancers to write guest posts to be published on blogs and Web sites.

Home business: The ideas and potential for a home business are limitless. I know folks who have Creative Memories stores or operate a video business or sound studio at their home. One of the great benefits of running a home business is that it greatly reduces your initial investment.

Develop and sell a product. I have good friends who have designed a children's game and are in the process of producing and marketing it. It's a lot of work, but they are passionate about the work, and the potential payoff is huge.

Start a blog. Making money online requires very little cash investment and can be done on your schedule from home. This is one of the reasons I've started a weekend series on how to make money blogging. I am in the process of walking through how to set up a site, and then I'm going to use my Credit Card Offers IQ site as a working example to show step by step how to generate extra income online.

Generating income (along with minimizing expenses) is the foundation of sound money management. While earning extra income does take work, its payoff can be huge. If you are interested to taking the leap, here are some additional resources to consider:

• "40+ alternative-income ideas and resources" at Moolanomy.
• "40 ways to make money on the Internet" at Dumb Little Man.
• "10 ways to translate your passion into additional income" at The Simple Dollar.
• "20+ free passive-income resources" at Life Optimizer.

Other articles of interest at The Dough Roller:

• 5 must-have WordPress SEO plugins for a moneymaking blog
• Online marketing for a home-based business
• My one money advice