Automate Your Income to Simplify Your Life

Every Tuesday is Finance & Family Day at Zen Habits.

The title of this post almost looks like the subject of a spam email when I look at it, and yet I’m completely serious — one of the best ways to simplify your life is to put your income on autopilot. It’s not an easy task at first, but once you’ve got it set up, it’s well worth the effort.

Instead of working hard to earn money every day and every month, work hard to set up your income stream, and then do minimal work from then on out to maintain that stream.

I’ve talked before about how to put your bills and savings on autopilot — now let’s look at how to do the same thing with your income. This isn’t an original idea, of course — author and blogger Timothy Ferriss talks about how to do it in The 4-Hour Work Week, and my fellow blogger Brian Tracy calls it Passive Income (also see his excellent Five Ways to Create Passive Income). Author Robert Kiyosaki, among many others, has been talking about doing it with real estate for awhile now.

But in this article, we’ll talk a little about how automating your income can simplify your life, and then look at ways you can go about doing it.

Simplify, simplify, simplify
On this site we’ve talked a lot about simplification, from simplifying your to-do list to simplifying your closets and everything in between. The idea is that by eliminating the unnecessary and the clutter in your life, you can have more time to focus on what is truly important, and enjoy more calm and less stress in the meantime.

These same concepts apply to income, although we rarely give that much thought. Most of us work a salaried job, putting in the hours every day to get a paycheck, and that’s what supports our lifestyles. Sometimes we work a second job, to help pay the bills, or pay off the debts, or save. That’s the normal way of generating income, and there’s nothing wrong with it.

But if you give it a little thought, our means of generating income can really complicate our lives. We have a lot of daily stress from our jobs, and the daily grind can be tedious and exhausting. We have long to-do lists and endless meetings and phone calls and emails and interacting with co-workers all day long. A job is the ultimate complication.

Now imagine that you create a small business for yourself, perhaps on the side, or maybe you create a property such as a book or a CD that can be sold over and over again once it’s created. Sure, this will take a huge investment in time and energy, and perhaps money (though not always), but once it’s done, your investment of time and energy is minimal, and the return is well worth that initial investment.

Put in some hard work, and soon a steady stream of money could be coming in, and you only have to put in a small amount of time each day or week to make sure that things are running smoothly. Now your automated income supports your lifestyle with very little work required, and you’re free to pursue your dreams and passions. No more long to-do lists, no more meetings and days full of calls and emails and co-workers. No more commutes. That’s the ultimate simplification.

It’ll take a lot of work at first, but isn’t the simplicity that results worth the effort?

How to Automate Your Income
There is no one way to create an automated stream of income — there are many different approaches. And the details required to implement them would take a book to cover. The following are just some ideas to get you thinking, and to open your mind to the possibilities. I should also note that there is always a risk of failure to any of these types of ventures — nothing’s guaranteed, but with some smarts and hard work, it can be a success.

Creating a business. For many employees, the thought of creating a small business is scary, perhaps even unthinkable. But there isn’t that much to it. And if you keep your costs down — say, operating off the Internet instead of opening a real-world retail outlet — your initial costs don’t have to be super high. Do some brainstorming, do some research and testing, and then go for it! If you do it right, you don’t even need to hire employees — contract out the services you don’t want to do to freelancers or contract firms. The possibilities of small businesses are endless, but what you really want to do is create a product, and sell it on the Internet. Create a product that you would actually use, aimed for a niche market that you actually belong to, so that you will know a lot about the product and the customers and their needs.
Websites. Why sell on the Internet? The initial costs are way lower, for starters, plus it’s much easier with less hassle, and everything can be automated, unlike real-world establishments. No real estate to rent, no equipment or furniture to purchase, no utilities or IT infrastructure to set up, no employees to hire. Keep it simple. Creating a website has low costs, all of which can be done under $1,000. Research each of these steps before getting started:
- buying a domain
- getting a web host
- hiring a web designer (or doing it yourself)
- buying CPC ads (such as Google or Yahoo)
- getting a checkout system (again, like Google’s or Yahoo’s)
Turn your service into a product. Do you currently provide a service? If so, you have to devote many hours each week to provide that service. However, if you can turn that service into a product, such as a book or DVD or web site or CD, you can create it once and sell it over and over. Brainstorm the best way to create a product that gives customers the same information or skills that they would get from you in person. See how others have done it for inspiration. Most of these products can be created easily and cheaply, using software on your home computer, and can be mass produced by a number of companies for a pretty low price.
Other types of automated incomes. Instead of creating an information product, you could create a real-world product, such as a gadget or nutrition product. Freelance designers can turn your idea into an actual design, and contract manufacturers can turn the design into a product. Other types of automated incomes include real estate, online retail businesses (including an eBay business), affiliate marketing, a blog, and a membership-type website. There are many possibilities. Find ways to turn your strengths into a revenue generator.
Initial investment. Most of these types of businesses require an initial investment of time and money. The time investment just means you’ll have to put in some hard work, at least for the first 2-3 months, until you have it automated. But the money investment can stop a lot of people. If you’ve got a little money saved up, creating a low-cost, low-maintenance business might be a good investment for that. You could also get a small business loan, or a personal loan from friends or family. If this is a problem for you, consider some of the lower-cost setups, such as a blog (only costs are domain name and hosting) or creating a DVD yourself and selling it online.
Test first. Before you launch your business and start manufacturing your product, test it out with some ads first. You can do this with print ads in niche magazines (don’t try to sell to everyone, just a small, focused niche) or with Google Adwords. Set up your website to take orders, place the ads, monitor the stats, and see if there’s any demand. If the demand is good, begin the manufacturing immediately. If not, you may need to tweak either the ads, the niche you’re marketing to, or the product itself.
Automate your business. Once you’ve got your website up and running, and you’ve begun taking orders and mailing out the product yourself, find ways to automate every part of your business. There are companies you can contract to take the orders, place the orders with a manufacturer, process the credit card charges, and ship the orders off to the customer. If you contract out the manufacturing, the credit card processing, the shipping and order handling, all you have to do it make sure there are no problems. Tim Ferriss’ The 4-Hour Work Week is a great guide to making this happen.
Sit back, and enjoy. Once you’ve got everything automated, you’ll only need to monitor things to make sure everything is running smoothly. And to make sure the money is piling up in your bank account. At this point, your time commitment could be as little as 30 minutes a day or even an hour a week. Quit your job, watch your automated income flow in, sip Margaritas. Life, simplified.

See also:

If you liked this article, please bookmark it in del.icio.us. Thanks!

Automate Your Income to Simplify Your Life

Every Tuesday is Finance & Family Day at Zen Habits.

Instead of working hard to earn money every day and every month, work hard to set up your income stream, and then do minimal work from then on out to maintain that stream.

But in this article, we’ll talk a little about how automating your income can simplify your life, and then look at ways you can go about doing it.

It’ll take a lot of work at first, but isn’t the simplicity that results worth the effort?

Creating a business. For many employees, the thought of creating a small business is scary, perhaps even unthinkable. But there isn’t that much to it. And if you keep your costs down — say, operating off the Internet instead of opening a real-world retail outlet — your initial costs don’t have to be super high. Do some brainstorming, do some research and testing, and then go for it! If you do it right, you don’t even need to hire employees — contract out the services you don’t want to do to freelancers or contract firms. The possibilities of small businesses are endless, but what you really want to do is create a product, and sell it on the Internet. Create a product that you would actually use, aimed for a niche market that you actually belong to, so that you will know a lot about the product and the customers and their needs.
Websites. Why sell on the Internet? The initial costs are way lower, for starters, plus it’s much easier with less hassle, and everything can be automated, unlike real-world establishments. No real estate to rent, no equipment or furniture to purchase, no utilities or IT infrastructure to set up, no employees to hire. Keep it simple. Creating a website has low costs, all of which can be done under $1,000. Research each of these steps before getting started:
- buying a domain
- getting a web host
- hiring a web designer (or doing it yourself)
- buying CPC ads (such as Google or Yahoo)
- getting a checkout system (again, like Google’s or Yahoo’s)
Turn your service into a product. Do you currently provide a service? If so, you have to devote many hours each week to provide that service. However, if you can turn that service into a product, such as a book or DVD or web site or CD, you can create it once and sell it over and over. Brainstorm the best way to create a product that gives customers the same information or skills that they would get from you in person. See how others have done it for inspiration. Most of these products can be created easily and cheaply, using software on your home computer, and can be mass produced by a number of companies for a pretty low price.
Other types of automated incomes. Instead of creating an information product, you could create a real-world product, such as a gadget or nutrition product. Freelance designers can turn your idea into an actual design, and contract manufacturers can turn the design into a product. Other types of automated incomes include real estate, online retail businesses (including an eBay business), affiliate marketing, a blog, and a membership-type website. There are many possibilities. Find ways to turn your strengths into a revenue generator.
Initial investment. Most of these types of businesses require an initial investment of time and money. The time investment just means you’ll have to put in some hard work, at least for the first 2-3 months, until you have it automated. But the money investment can stop a lot of people. If you’ve got a little money saved up, creating a low-cost, low-maintenance business might be a good investment for that. You could also get a small business loan, or a personal loan from friends or family. If this is a problem for you, consider some of the lower-cost setups, such as a blog (only costs are domain name and hosting) or creating a DVD yourself and selling it online.
Test first. Before you launch your business and start manufacturing your product, test it out with some ads first. You can do this with print ads in niche magazines (don’t try to sell to everyone, just a small, focused niche) or with Google Adwords. Set up your website to take orders, place the ads, monitor the stats, and see if there’s any demand. If the demand is good, begin the manufacturing immediately. If not, you may need to tweak either the ads, the niche you’re marketing to, or the product itself.
Automate your business. Once you’ve got your website up and running, and you’ve begun taking orders and mailing out the product yourself, find ways to automate every part of your business. There are companies you can contract to take the orders, place the orders with a manufacturer, process the credit card charges, and ship the orders off to the customer. If you contract out the manufacturing, the credit card processing, the shipping and order handling, all you have to do it make sure there are no problems. Tim Ferriss’ The 4-Hour Work Week is a great guide to making this happen.
Sit back, and enjoy. Once you’ve got everything automated, you’ll only need to monitor things to make sure everything is running smoothly. And to make sure the money is piling up in your bank account. At this point, your time commitment could be as little as 30 minutes a day or even an hour a week. Quit your job, watch your automated income flow in, sip Margaritas. Life, simplified.

See also:

If you liked this article, please bookmark it in del.icio.us. Thanks!

Posted on 6 June 2007 in Finance & Family |
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Comments (13)

Mihaela Lica Says:

June 6th, 2007, 8:41 am

Very good article, but you are right: that title does sound like a spam email. LOL. I almost ran away from your blog, but I do trust Phil Gerbyshak’s judgment and so I said to myself: wait a sec, it cannot be. And I am glad to be here. :)

Productivity Says:

June 6th, 2007, 9:19 am

Your article is exactly what I am doing. I spend more than few hours to work for my auto-pilot income. up to this point, the income is still low. but i never give up because i am confident on my product. Anyway, you miss out a point about “Confident and Passion”

Victor Says:

June 6th, 2007, 11:38 am

My wife started streamlining her income right before we met about 7 years ago, and after a couple of years she was able to close her law practice, replacing a low 6 figure income with passive income investments. Now she is at home, and volunteers and works out of what she loves as money is literally mailed in.
Now we’re doing it together and my goal is to have the choice to ‘retire’ from my job (another 6 figure job) in the next 3 years.
We mostly focused on ‘hard money lending’, or real estate investing. Where you lend money to people that are doing real-estate deals for higher interest rates that they could get from a bank, because for whatever reason they don’t or can’t get loans from a finance institution.
Its worked wonders and now were turning it into a business like this article suggests, teaching people how to have their money working for them:

http://www.hardmoneymadeeasy.org

Its been a blast - and there’s more to come. More than anything its a new way of thinking about money. A great way to start ‘thinking different’ (like Apple used to say) is with the Robert Kiyosaky books and specially the cashflow games. Can’t say enough about the caskflow games here:
http://www.cashflowtechnologies.com/fun_downloads/cashflow_games/

Enjoy life and live long and prosper…

karenlim Says:

June 6th, 2007, 11:43 am

Awesome and you hit the nail on the spot!

I do the things you mention.

When pay comes, I automatic transfer a sum to my investment account which gives me the higher yield and also building my passion ( http://www.secretofunlimitedprosperity.com).

Want to write a book in future for this area.

Cheers, Karen

Tantowi Says:

June 6th, 2007, 20:34 pm

Do what you love, the money will follow.
Sometimes life hits you in the head with a brick. Don’t lose faith. I’m convinced that the only thing that kept me going was that I loved what I did. You’ve got to find what you love.

Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work.
And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle.

As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it.

Jerry Says:

June 6th, 2007, 21:22 pm

These tips are nice to change the routine, to do something new, for fun, but don’t expect making much money blogging or selling tea bags online. I have a friend who is retired and who blogs all day long. He makes $50 a month with Google Adsense. This barely pays his web hosting.

Leo Says:

June 6th, 2007, 22:15 pm

@Jerry: It’s true that it’s hard to make money blogging. But it is possible. My income from this blog has increased every month, and while I can’t quit my day job, that’s a possibility in the future. But other businesses mentioned in the article can support you — I know of a number of people who started online businesses that support their lifestyles.

HopefulGirl Says:

June 7th, 2007, 18:47 pm

Thanks so much for sharing. As a recent college grad who is quickly figuring out she hates the 9-6 office day, I am looking forward to finding a way to do one of the techniques mentioned here. I like the idea of working smarter not harder.

The best advice I have ever heard is to find a way to make money doing what you love.

Thanks, Leo!

Productivity Says:

June 7th, 2007, 20:01 pm

Hi HopefullGirl,
You are right. I hate 9-6 office work too. But i got no choice to continue it while building my auto-pilot income. You hit the nail, “find a way to make money doing what you love”. I wish to do that but I got a lot of commitment. But I really want to give a try.

Nix Says:

June 13th, 2007, 15:31 pm

Listen, how is it that this pipedream is actually being spun into believability? The contents in this article and within the others that are linked within is nothing more than ‘get rich quick’ jargon that somehow seems more palatable beacause instead of it being concucted by some slight of hand scam artist, it is a do-it yourself guide.

I don’t mean to sound harsh or condecending and I am a fan of entrepeneurship of course, but what is being proposed here is some attempt at loopholing genuine ingenuity.

Imagine for a second what our economy would look like if everyone subscribed to this path towards free, er I mean, automated money. We, you, I, whomever had a computer would have nothing to spend our easily earned dollar (that we no doubt recieved in the mail for the sale of our new line of gay, horseback riding enthusiast’s belt buckles) on but useless trinkets and poorly written biographies.

stephen Says:

July 18th, 2007, 11:50 am

pardon my cynicism, but it sounds a little like steve martin’s routine about how to be a millionaire and not pay taxes. “first,” he says,” get a million dollars….” automate my income - first, create a cd, or write a book, and then sell it, and sit back while the money rolls in. i suppose anyone can write a book, but writing a book that will sell, and sell enough to actually create income, is not as easy as you make it seem. your suggestions on spending less and enjoying what you have more are spot on -”we can live here and be happy with less.” creating an automated income that will sustain me and my family (health insurance, two kids in college, etc.) is not as easy as you make it sound.

Sanjay S Says:

September 12th, 2007, 3:39 am

Unfortunately the comments to this article are well-suited to spam about MLM! I’ve spent a lot of time thinking about this very thing and trying to brainstorm ideas and have come to one sad conclusion — the concept is good, but the execution is hard. Having an idea or a product that would earn you the same amount of money as a good salaried job is not easy to think of or come by for most people. Also, think about it — if everyone went on auto-pilot, then life as we know it wouldn’t work….:-). I think perhaps one in a million people succeed at doing this and a ton of these successful people are doing some sort of MLM. And I think MLM is harmful for your soul!