A recession is not the time to start adding income to your bottom line; you should start that process well before the balloon goes up.
We must all prepare for the reality that we will lose our jobs during a recession. Similarly, we should learn how to generate income outside a W-2 job to control our financial destiny.
Welcome back to the Preparing for a Recession series (#1, #2, #3), where we locate, isolate, and contain recessions before they can harm us.
4 Years of College vs. 4 Years of Content Creation
The A.I. boom. It’s no secret that artificial intelligence will change the job market forever. Don’t be surprised if the A.I. boom causes the next recession or depression.
Large and small companies will still produce massive profits, but this time without us. We will be on the sidelines working at restaurants and hospitals.
For these reasons, we need to learn how to be financially self-sufficient. We must be able to create money out of thin air to survive and thrive.
Here are some ways that we can make money independently: renting rooms, becoming handymen, creating content, and trading options. Let’s explore each of these in more detail.
Renting rooms to financial freedom. The best way to make money is to rent a room or two in your primary residence. There simply is no way to create more wealth for the average person than renting rooms.
3 Steps to Love on Passive Income
They sold us a huge lie. They said that living independently would give us the greatest reward—freedom.
Devoted “independence lovers” want freedom from rules, regulations, noise, and people. However, they didn’t tell us how difficult it is to live alone. Instead, most people live above their means just to survive in this new “independence economy.”
They told us to move to the suburbs, and then prices tripled. They told us to go to college, and then prices tripled. They told us to all go to work, and then childcare tripled. Do you see where I am going with this?
Luckily, the answer has always been in our faces: we must work together. We benefit from economies of scale as soon as we start working together.
Dividends vs. Military Retirement
My wife and I had roommates for four years, allowing us to pay off all of our debt and build a $300,000+ dividend portfolio. We then went for about two years without a roommate.
In preparation for the coming recession, we got another roommate. The mortgage payment on our primary residence is $1,700, and the roommates pay us $1,000 monthly. It’s easy to survive and thrive when we only pay $700 for housing.
Becoming a handyman. Robots won’t be able to replace handymen for at least 50 years, leaving people with a massive opportunity to earn money from the trades.
Passive Income from Creativity 106: Writing
We can all go to trade school, but we don’t need to enter the trades full-time. I think the market for handyman-level tasks will be much higher than people realize.
There comes a point when taking big jobs is the only way to turn a profit for electricians, plumbers, mechanics, car detailers, carpenters, and contractors: t.
This leaves a huge gap for people who can fix faucets, repair lights, and lay flooring for a small room. Most people in the trades want full renovations before they enter an agreement. They want the 2-3 month job over the 2-3 hour one.
Teaching ourselves to be D.I.Y. handymen and handywomen will pay off in spades. You can gain experience on TaskRabbit, but eventually, you want to have your own small task business.
A friend makes over $10,000/month as a handyman in California. We can replicate this success at a smaller scale by earning $1,000 to $2,000 per month.
Passive Income from Creativity 105: Audio & Speech
Creating content for passive income. The world of content creation is saturated; however, you can still generate passive income from this competitive environment.
It’ll take roughly five years of hardcore, full-time work to create a job for yourself in content creation. However, that’s not the point I want to make.
Having a small book business or YouTube channel is all you need, especially if you have targeted services. Writing a book or shooting a video is an excellent way to establish expertise.
Ultimately, we want to use our content creation business to funnel business toward our other endeavors. Let’s say we have a bee farm we want to promote. We can use our content channels to make our audience aware of our place.
The good part is that we don’t need to have all the pieces of the puzzle when we start creating content. We just need a general idea of where we want to go.
Passive Income from Creativity 104: Video
Going into a recession, we will need to add lots of value to customers and viewers because money will be tight. Only the strong that produce the most value will survive the recession.
Options trading from home. Once we generate some revenue, it’s time to put it to work. Although I believe dividend investing is more suitable for the average person, options trading will become a powerful ally to those who learn it.
If we can produce $1,000 from a roommate or trade task, we can exploit it on the options market. At the end of the year, we could have $1,500—a 50% return.
Options trading requires patience and emotional control; it’s not for everyone. However, in a recession, the stock market will still be moving, and we must profit from these gyrations.
Passive Income from Creativity 103: Art & Design
You can trade options however you like. I use three plays: selling covered calls, selling cash-secured puts, and trading long strangles.
These strategies have all worked well for me—helping me achieve 30% returns on invested capital. However, you may want to try some of the other plays that better suit your temperament and disposition.
Whatever you try, options trading is an important income stream for the average household. Most people cannot take $1,000 and turn it into $2,000 in two years. If you can do that, you win.
Putting it all together. What do these four diverse income streams have in common? You. You can use all of these income streams in tandem.
In fact, if you can reduce expenses, stay on a budget, and live below your means, you could probably generate enough income from these streams to stop working full-time.
Passive Income from Creativity 102: Photography
All of these income streams work best in combination with one another. For example, you can use money from a roommate to fund your options trading portfolio.
You can create a YouTube channel around your handyperson business. You can write books about your options trading career (like me).
Conclusion. The people who think outside the box will win. It’s as simple as that. We cannot depend on anyone to provide us with a paycheck during a recession or otherwise.
Passive Income from Creativity 101: Music
That leads me to my final point—there will be no jobs for our kids. Yes, there will be a few jobs, but in 20 years, the employment landscape will be completely different.
We must prepare for a world where most jobs may be in the metaverse or the entertainment field. As we prepare for the coming recession, we must consider that the world will change directly following it.
Everything we learn now will directly impact our kids’ futures. So we can teach them to live below their means while using diverse income streams to live and thrive.
The old days of going to college and climbing the corporate ladder are over. The new economy thrives on creativity and self-motivation. No one will pay us to sit in an office for eight hours. We can do better. Good Luck!
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