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Are you looking for ways to increase your income?

Author
The Connector
Category
Date
12 September 2022
5 min read

Have you thought about increasing your income in a way that doesn’t interfere with your day job? Having a passive income can boost your personal financial goals and help you reach financial security by having
more than one stream of income. This can help you afford expenses that you might not be able to achieve on the income from your day job alone.

It's important to find a passive income stream that works for your situation. Some passive income opportunities need you to have start-up money, while others need your knowledge and time. With the world open online, you aren’t restricted to opportunities only on your doorstep.

Passive income that requires money upfront

Some traditional ways of earning a passive income are when you receive income from a rental property or when you receive dividends from share investments.

One way to earn a passive income through investment includes investing in property. A long-term rental is where you rent out part or all your property to a tenant for a fixed time, like a six month or one year lease. A short-term rental is when you rent out part or all your property for a shorter period, usually without a lease. Websites like Airbnb allow you to list your space for a night at a time.

Being a landlord or a host takes some effort, especially if you want to earn good reviews. There is some risk taking when renting out your home, but this can be mitigated to some extent by screening potential visitors or tenants. It’s also important to understand the tax implications of receiving rental income and knowing what deductions can be claimed.

Another form of passive investing involves investing in shares. Companies you have invested in declare a dividend when they have made a profit which can provide passive income. If you are investing to generate a passive income, you need to invest in shares that have a good track record of issuing dividends at least once per year. There are risks to investing in shares as the capital value fluctuates. It’s recommended that you research the business’ profile and understand market trends when deciding which share to buy to maximise your dividends.

Passive income that needs time and knowledge

Nowadays, there are ways of getting a passive income that might not need you to put up money upfront. If you’re hoping to increase your income but don’t have enough money saved up to fund an investment, there are ways to earn passive income that use your knowledge and time instead.

Affiliate marketing is a source of passive income in South Africa as in the rest of the world. This is a tactic where companies and marketers pay individuals to promote their products to their followers. Whenever there is a sale, the promotor gets paid a percentage, like a commission. Affiliate marketers are often website owners, YouTubers, podcasters, social media influencers and bloggers.

This can involve more work than would typically be needed for a passive income and opens you up to public comment. On the other hand, it can give you the opportunity to follow your passion while supplementing your income.

We are living in an information age. If you know something that most people don’t, there is an opportunity to sell the information. Some examples of this are where people create courses that they sell online, develop lessons for YouTube or get sponsors that support you in exchange for a mention.

Don’t forget about the tax aspects of earning a passive income

For all these great ideas to make additional income, it’s important not to forget about tax. Always remember to check if the income you are earning is taxable and don’t forget about claiming deductions where possible. For expenses to be tax deductible against passive income, the expenses must be incurred (that means that it has been paid already or is due and payable), there must be a link between the expenditure and the passive income, and the expense cannot be of a capital nature. This means that the expense can’t result in a long-term benefit. If you are in doubt, its recommended that you get assistance with the tax aspects.

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