Smart SpendingSmart Spending

Modest sums can pay for big goals

Small income streams can pay for major expenses like a car or a college degree. Here's how.

By MSN Money Partner Oct 31, 2011 9:02AM

This post by Julie Mayfield originally appeared as a guest post at partner blog Get Rich Slowly.


I have great respect for small amounts of money. Maybe it's because I'm a mom who works part time from home and my income comes in as many small payments. Or maybe it's because I've acted as the bookkeeper for several small businesses and I've had to record and account for each dollar.


When it comes to household finances, it's easy for small amounts of money to slip through your fingers. They tend to get deposited in your checking account or crammed into your wallet and eaten up by everyday expenses.


That doesn't have to be the case. I've seen small amounts of money do big things. Like help put my daughter through college without student loans. Or buy a used car for my son. Even pay off debt.


Here's what you need to know about making small amounts of money add up to something big: You have to first see it as a stream of income and then give it a job.


College savings
Like a lot of people, we were unprepared for our oldest child's college expenses. We had only a small amount of money saved up and the stock market crash had essentially cut that in half.


But a couple of years before our daughter left for college, I started doing some writing online, which resulted in a small stream of income. I decided to devote that stream of income to her college savings and started religiously transferring any amount of money I received from my writing -- no matter how small -- into an online savings account set up just for that purpose.


In other words, I gave my freelance writing and blogging income the job of paying for my daughter's college education.


By the time she left for college, I had just enough money to cover room and board, books, a new laptop, and the amount of tuition not covered by scholarships.


And as she worked at her studies, I continued writing and putting away income as it came in. My daughter has started her second year of college and the money for this year is already set aside. My plan is to stay ahead of her college expenses by saving -- and growing -- this stream of income.


Saving for a car

I have another regular source of income: I do the bookkeeping for two (very) small family businesses.


Again, the amount of money I get from these jobs isn't large. It's the kind of money that can easily be swallowed up by our family's monthly spending.


But earlier this year, I gave that bookkeeping income stream the job of buying a used car for my son. Each month I transfer the amounts I receive for the bookkeeping jobs to another dedicated online savings account.


That account has more than $3,600 in it and it's growing monthly. Once we buy a car for him, that money will continue to be set aside for future car replacements.


But what if you or your family has only one or two main sources of income? And what if every dollar is spoken for? It may seem like managing your finances with multiple streams of income is for other people.


Income you didn't know about
The good news is that there's one stream of income you probably didn't know you had: found money.


Found money is any money you receive that isn't part of your regular income stream(s). It might include rebates, insurance reimbursements, garage sale money, or even the birthday checks from Grandma.


Found money usually shows up in small amounts, and you probably weren't expecting it -- or at least not counting on it. When those amounts are combined, they create a stream of income that can be given a job.


In our household, found money is given the job of making extra payments on debt. In the last 11 months I've been able to throw more than $1,300 in found money toward our debt, in addition to our regular scheduled payments and other money we've earmarked for our debt snowball.


Here's the breakdown of where the found money came from:

  • Amazon, Craigslist and eBay sales = $344.
  • Medical insurance and other reimbursements = $313.
  • Debit card cash-back rewards = $250.
  • Rebates (cellphones, fertilizer, contact lenses) = $218.
  • Gifts = $75.
  • Jury duty pay = $62.
  • Unclaimed money = $56.

Once our non-mortgage debt is paid off, we can use this money to fund a vacation, save for Christmas presents, or even prepay our mortgage. The exciting part will be deciding what to do with it.


"Multiple streams of income" may seem like marketing speak for hucksters on TV. But even small income streams can do big things when they're given specific jobs. How do you use small income streams to do big things?


More on Get Rich Slowly and MSN Money:

Oct 31, 2011 12:32PM
Kudos! This is a very empowering article. I too like to have little "buckets" for different purposes and having cash for special purposes (like, the washing machine has to be replaced someday, it's 25 years old) keeps me from carrying a balance on my credit card - which also saves money.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.