We’re all familiar with the starting players in football -- Peyton Manning, Terrell Owens and Brett Favre, to name a few. The commentators discuss them at the introduction of the game. They’re the topic of conversation at the watercooler. On game day, first-string players get their names announced in the stadium and on television when they take to the field as thousands cheer.
What we don’t often hear about is how these players got there. Three-time Super Bowl champion Tom Brady started out as a fourth-string quarterback who finally got his opportunity when he was called upon to replace an injured Drew Bledsoe. Even NFL Hall of Fame legend Joe Montana didn’t start until the end of his second season. Not until he pulled off numerous fourth-quarter comebacks (31 in all) did Montana earn a name for himself.
The goal should be the same with your money: To develop small sources of income into big players. With these simple completions, you can soon be posting gains that can help take you down the field, closer to your financial goals. Let’s take a look at some plays.
First and 10: Earn Interest, Dividends and/or Capital Gains
Setting aside cash in a high interest-bearing money market or checking account will give you a frequent boost. Internet banks, such as EverBank and ING Direct, pay out higher interest on average than local banks. These accounts credit the interest monthly. An investment in a growth and income or balanced fund with a large mutual fund company will earn a payable credit generally every quarter. You can usually choose to reinvest this payment or pay it out to yourself.
Second and 8: Get Cash Back on Credit Card Purchases
Most credit card issuers like to pay out points that you can redeem for merchandise at a rate of about 1 percent of the total you spend. Instead, look for cards that pay cash and at a higher rate. Some cards tout 5 percent cash back on certain purchases and 1 percent on all other purchases, for example. However, remember to charge only what you can afford to pay off in full each month.
Third and Long: Turn Your Interest or Hobby into Cash
This may seem like a long ball, but if you love something anyway, why not invest the effort and make some money at the same time? If you like to write, think up a book or article idea and pitch it to an agent or publishing house. If you sing, record a song and upload it through a digital distributor such as TuneCore to iTunes. No time? Look for pockets of downtime -– such as your commute on the train or the time you spend watching TV -- that you could use for some creative exploration. Alternately, if you have dropped a favorite hobby, maybe it’s time to turn that old sports equipment into cash by selling it on eBay or at a garage sale.
Fourth and 1: Get a Check from a Rental Property
If you’re looking for something to push you over the top, real estate is worth exploring. With declining home prices, you may be able to leverage a 20 percent down payment into a sizable return on investment. But do the numbers first. Make sure the likely income from a tenant will exceed your monthly costs before you do the deal. Keep the cash flow positive. Appreciation over time on a property is a bonus, but don’t base your investment on it.
Once you begin to develop these small pockets of income, you’ll be surprised at how quickly they start to become real contributors to your family’s financial success.