Active income or working as an employee is probably the easiest way to earn a living. Employers pay us either weekly, bi-weekly, twice a month or monthly. Additionally, there are great benefits one can receive as an employee depending on our employer such as overtime pay, paid vacation, sick leave, health or medical insurance, pensions, etc..
However, we need to put in the hours and get up everyday in order to get paid. We trade time for money.
Did we even realize that there are only 24 hours a day, 7 days a week or 4 weeks in a month? Either we get paid by the hour, by day or per transaction. Essentially, that means that time is limited and there is only so much you can do.
At times, we work overtime or take a second job hoping to bring more money home but this is also counter-intuitive as the more hours we work the more taxes we pay. Employees are often taxed the most – up 40% or higher.
As a matter of fact, there is always a danger of being solely reliant on one active income. One may get sick and unable to work, get fired, or simply the company will close due to bankruptcy or closure as advised by authorities such as what happened during this pandemic.
However, we should not be confined in our work spaces or current jobs alone to find extra income elsewhere. Hence, it is best to build other sources of income or call it side hustle if you may while still working actively as an employee.
Building Multiple Sources of Income
Overtime, we have learned to develop and build sources of income away from work. These sources of income are available to mostly anyone or perhaps already existed in your current financial situation.
It is simply making a habit of looking after the cents or pennies and the dollar will look after themselves.
1) My own 9-5 regular job. Prior to 2020 I was doing casual work as I prefer the flexibility so that we can travel anytime. However, this pandemic has made many individual plans on hold me including. Traveling was a No go for the last two years. Hence, I decided to go back in the workforce on a part time basis. While I maybe working less hours yet I still make an equivalent to a full time salary due to our on call portion of a PACU nurse which we get paid at double time on evening calls and weekends.
A new grad and starting RN in BC will make $36.23/hour for a level 3 RN or an annual gross income of $70,000 while an experienced nurse with more than 10 years experienced will make $47.58/hour or annual gross income of $100,000 as per BCNU website excluding overtime.
2) Wife 9-5 full time regular job. My wife still enjoy and loves her job and decided to stay full time for the remaining years before she hits retirement. She has been a PACU nurse for more than 20 years.
3) High Interest Savings Account (HISA) – We have set aside a small amount for emergency purposes. Our favorite savings account is EQ Bank. It is an online bank that doesn’t have physical locations hence they are able to pass great interest rates to their customers as they don’t have a lot of staff and overhead costs compared to traditional banks. Additionally, it isn’t like any bank that you will be enticed to open an account offering a high interest rate only to drop it to a miniscule amount after a few months. Here’s some of the key features of EQB bank.
- 1.5% interest. It is calculated daily on the total closing balance and paid monthly.
- No minimum balance or monthly fees
- Free bill payments
- Free Interac e-Transfers
4) Credit Cards – Majority of adults nowadays own and carry a credit card. Credit cards are simply a loan or credit offered to anyone of legal age which can be used to purchase items, products or services. In return, the cardholder has an obligation to pay either the minimum or full statement balance monthly.
All you have to remember is to pay your credit card balance in full every month so that you won’t incur any interests. It isn’t complicated after all. Otherwise, if you are not disciplined enough to do it, probably best not get one in the first place.
We use credit cards on everything (not debit cards or cash) as it offers more protection. Majority of the time credit card companies offer $0 fraud liability if managed wisely.
Here’s a few criteria what I look for in a credit card:
- No annual fees
- Cashback credit card
- Alternatively, credit cards with reward points toward free groceries
- Credit cards that offer other additional benefits such as medical, travel, trip cancellation, baggage delay or loss insurance, etc.
I like cashback credit cards that pays cash or checks instead of cashback rebate to your existing balance as I prefer to use the cash for any purpose (either adding towards our emergency fund or to our investments)
My primary cashback credit is Capital One Aspire Cash World Elite Card. However, this card has been grandfathered and no longer available to new customers. It used to be the top cashback card in Canada with excellent benefits. It’s benefits include: Travel Emergency Medical anywhere in the world for up to 22 days whether you use the card or not to purchase travel, Trip Cancellation, Trip Interruption, Flight Delay, Baggage Delay, Baggage Loss, Travel Accident Insurance, Car Rental Collision/Loss Damage Waiver, Extended Warranty (doubles the manufacturer’s warranty up to two years) etc. More recently, they have reduced their cashback rate to 1% from 1.5% but the card is worth keeping due to its unparalleled benefits. Our cashback earned in 2021 $415.50. Ist check received in February $128.55.
Alternatively, Tangerine World Mastercard is my back up credit card. Key benefits include: No annual fee, Rental Collision/Loss Damage Insurance, Mobile Device Insurance etc. This card pays 2% cashback to 3 chosen categories of your choice and the rest is 0.5% and no limit to cashback earned. The cash back earned is credited to your savings account monthly. In 2021 we earned $134.83.
If you apply for the Tangerine World Mastercard through GCR using this link you will also receive $100 instant cashback upon approval (promo till March 31st). Please note GCR may asks for a referral email and if you are happy to support this blog kindly use this email: firstname.lastname@example.org.
Home Trust Preferred Visa card is an excellent credit card to be used while going on vacation overseas as it doesn’t have any foreign transaction charge. It also pays 1% cashback credited to your account annually. A card that is best if you frequently buy online which is not in Canadian currency. During this pandemic this card has been hiding in our drawer waiting when international travel is safe to do so. Take a look at this link why it is essential to use a different card when you travel overseas or purchase in a different currency.
President’s Choice (PCF) World Elite Mastercard. Additional benefits to this card includes: Travel Emergency Medical Insurance for trips up to 10m days from date of departure for those under 65, Car Rental Collision/Loss Damage Waiver Insurance, Identity Theft Assistance Service, and Concierge service. In combination with our PC Optimum and getting most of our groceries at any Loblaws store chains: Real Canadian Superstore, No Frills, Shoppers Drug mart and get petrol at ESSO and Mobil stations. In December 2021, I have reached 200,100 PC Optimum points ($200) accumulated towards our annual free Christmas groceries and dinner.
5) Cashback Websites – The other little trick that we do is if we want to buy something online or book for a flight, hotel or vacation is visit these two cashback websites first Great Canadian Rebates (GCR) and Rakuten if they have any cashback offered first – rather than going straight to the company or travel website. By doing this and using your cashback credit card you end up earning extra cash instead of going directly to the company’s website. In 2021 received $84.94 from GCR and $46.87 from Rakuten. Please note GCR may asks for a referral email and if you are happy to support this blog kindly use this email: email@example.com.
6) Sell unwanted items through the Facebook marketplace. If you are parents like us and have kids you know that overtime you have accumulated so many things such as clothes, books, video games or toys etc. By doing spring clean or house clearance you may reclaim space in your home. Either you donate these unused items or if you feel that it still has some value why not sell it. You will be surprised that your junk is someone else’s treasure. In 2021 sold $600 of unwanted items through FB marketplace.
7) Return recyclable bottles and containers – Wine or beer bottles, soda or beer cans, and carton packages or tetra-paks are also items that we see a lot in our kitchen. We could easily take these to a bottle depot or recycling center and earn a little bit of cash. 2021 made $75.
8) Referral Program – For most of you who follow my blog, I am an account holder with Wealthsimple Trade. I like to trade in an online investment brokerage that offers minimal commission or better a No fee trading platform to maximize my return. You may want to check my live non-registered dividend growth investing portfolio. In 2021 earned $163.53.
If you are interested and would like to start investing in a personal account with WS and use this link then you will also earn 2 free random stocks which you can keep or use the cash value to buy your own stock and I will receive one random stock. For more details take a look at this link.
9) Real Estate Investment Trust (REIT’s) Instead of being a landlord and own rental properties, I prefer investing in Real Estate Investment Trust (REITs). REITs are companies that own, operate and finance income-producing properties such as industrial, commercial, residential homes, multi-storey complexes, and malls. REITs are traded in the stock market just like common stocks. In return REITs are mandated by law to pay 90% of its earnings back to their investors in cash distribution or dividends. Generally, REIT’s pay their distribution either quarterly or monthly. Fortunately, if you live in countries such as the USA and Canada, there are quite a few of these companies that pay monthly dividends. These are one of my favorite sources of passive income. REITs are best suited in registered accounts such as TFSA and RRSP in my opinion.
10) Dividend Income – Finally, our favorite of all passive income is through dividend stocks. We aim to maximize our registered accounts TFSA our top priority then followed by RRSP, and use non-registered accounts after that if we still have the capacity to do so and invest in dividend growth stocks. We buy and hold dividend growth stocks and hope never to sell these dividend stocks for a long time. Our ultimate goal is to live off from dividends replacing our active income without harvesting its capital.
My Final Thoughts
Actively working as an employee is great as it is the quickest way to earn a living. Similarly, depending on our chosen careers, employers and/or companies may offer excellent benefit packages such as overtime pay, paid vacation, sick leave, and even pension. However, job security is not always guaranteed just like what many have experienced during this global pandemic.
Moreover, If you are fortunate to have an active (earned) income – to better protect yourself, I personally recommend to create other sources of income and make your hard-earned money work harder for you. Accumulate assets that produces an income.
At the same time, we continue to look for other money saving measures and reduce recurring monthly bills to free up some funds, which eventually we can divert towards our emergency fund or towards our investment portfolio. Also, my blog contributor who is my daughter has some tips on saving money as a college or university student.
In summary, following some of these simple routines mentioned above, you may be able to slowly build your own passive sources of income.
For transparency, I have started this blog with my commitment to only post our TFSA dividend income. We don’t have any intention to post the total value of our portfolio or personal net worth updates. Thank you for your understanding.
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