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 Tim Ferriss talks about how to do it in The 4-Hour Work Week (read an interview with Timothy Ferriss at Write To Done), 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.

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