This is Day #18 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

Let me start today’s task with some background information about my main source of income – writing. I started working as a writer when I was still in college. I needed money to support myself and pay for tuition, but also needed a flexible schedule so I could attend my classes. Writing was my favorite hobby, something I did non-stop since I learned how to do it. Ever since I was twelve I’ve been keeping journals and writing notebooks as a habit. This made me think that maybe I should start doing that for a living. Something I truly enjoy. Something I’m obsessed about. Something I was doing anyway.

So I started working as a freelance writer. This has been my major source of income and I’ve never had the need to apply for a regular office job because of it. It feeds and houses a family of four, keeps me debt free, and allows me to have a stable emergency fund. Plus, it’s personally fulfilling.

Not bad for something that was “just a hobby”.

Today’s Task: Pick a hobby you can monetize.

Hobbies. We all have them. They can provide relaxation and escape, or they can become a lifelong passion. If you plan it well enough, it can be a source of income too.

List your hobbies, every single one of them, no matter how trivial or insignificant some may seem. Cooking counts, even if most people can cook. Yes, riding a motorcycle counts too, so does drawing. If you’re obsessed with a certain genre of books/film/music, there might be opportunities there too. If you like to collect things such as stamps, dolls, etc., that counts as well.

Then, looking at your list of hobbies, pick two or three that you spend the most time on. Explore and jot down ideas on how you can possibly monetize them. Here are some examples:

• Sell products and services related to your hobby. If you like making jewelry, why not try to sell some of your work via eBay or Sulit? Alternatively you can supply materials related to your hobby if they are hard to buy locally. I have a friend who made thousands of pesos from just selling special  Magic: The Gathering cards.
• Write a blog about it. Many people are now monetizing their blogs. If done well, your blog can become a great source of additional income (see The Personal Blogging Degree for more information on making money from a blog.)
• Teach others how to do it. This can be in a form of a class, a book/ebook that people can pay for, or even just a lecture or speaking engagement.When I was young my mother made extra income by teaching a baking class from our home, and I once got paid to teach a summer art workshop for kids.

Your hobby doesn’t need to develop into a complete business, buy you need to entertain (and act on) any urge you may have of monetizing it. Even a few hundred pesos each month won’t hurt, especially if you’re doing something you love anyway. Not everything you start will be successful, but you can always do enough research/planning/practice/testing to minimize that risk.

Have you ever made money from a hobby? How did it turn out for you?

Image by lusi from sxc.hu

How much do I get paid per month?  This is the common question we ask ourselves when looking for new jobs or business ventures.  The “per month” way of measuring income has always been the default approach.  But is it the best one?

When I was listening to “The 4-Hour Workweek” audio book for the first time, the writer, Tim Ferriss, proposes a better question which changed the way I perceived income:

How much do I get paid per hour of work?

Why is this a better question? Let me answer that with an example:

Jose earns P100,000 per month, working at a high profile job for 10 hours a day, 5 days a week.  He works 10 hours a day because apart from the actual time in the office, he does overtime and takes some work home.

Maria, on the other hand, makes P50,000 per month, working 12-hours a week as a freelance web designer.

Based on the details above, this means that Jose makes only P500 per hour, while Maria makes P1041 per hour(*).  Apart from that, Maria has a lot of “free” time on her hands, which she can use to spend quality time with loved ones, pursue hobbies, and even look into other income streams.

“So what?” you might say.  Jose still makes more per month.

That may be true, but unless Jose is truly passionate about his job and never thinks “I’d rather be doing something else” or “I’d rather be somewhere else”, then he’s just trading his life for money. Rita Mae Brown said it best, “Don’t trade the stuff of your life, time, for nothing more than dollars. That’s a rotten bargain.”

If we look at income this way, then it seems like entrepreneurial ventures, consultancy, and freelancing sound like the best way to go.  Corporate telecommuting is also a good option, provided that your boss doesn’t require time-based logs of your work, and that you are productive enough to get the most tasks done in the least amount of time.

Try to do this exercise for yourself and see how much you get paid per hour.  What are your results like?  Was it less or greater than what you expected?

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(*) Of course, if you’re a service provider like Maria, this doesn’t actually mean that you should charge clients by the hour.  In creative fields, that’s never a good idea because you can easily be exploited.  Charging by project milestones is the best way to go.  To know your hourly rate for yourself, note the overall fee you received and divide it by the number of hours you worked.

Image by Steve Woods

I’ve been a freelance writer for the past four years, making money almost exclusively online. The corporate world is definitely not for my personality, so I did everything I could to avoid it. Along the way, I’ve learned several useful money lessons that I wouldn’t have learned otherwise.

Bill early, pay late. This took me a while to learn, and it’s more important especially if you have very busy clients who remember to pay you only a week after you send your invoice. Now, I bill them on the 1st of the month, while I pay for business expenses (contractors, web hosting, subscriptions, etc.) mid-month. By practicing this, you’re making sure that you already have enough funds when it’s time to pay for business expenses.

Diversify skills and sources of income. I didn’t just depend on my writing, especially when I was starting out. I also did a lot of design work, search engine optimization, edited videos, some data entry jobs, sold some of my artwork, and joined ad networks such as Google Adsense. Having various sources of income ensures that you always had an alternative venture in case your main gig ran a bit dry.

Also, as a freelancer, the diverse skill set allowed me to upsell services to clients (“Do you want some new graphics to go with the articles I’m writing for you?”), and I would become their go-to person for most of their web needs.

Be frugal with your time, not just money. One of the big problems I had with my first years of freelancing was that I let it consume so much of my time. I would work longer and harder than 9 to 5 ‘ers, thinking that this was the only way for me to make enough money. Eventually, I became a productivity blogger over at Pimp Your Work, and had to learn some time management skills. Now, I have made myself efficient enough to only work 9 to 15 hours a week, and can now enjoy the freedom that freelancing promises.

Have a padded emergency fund. I probably sound like a broken record since I talk about emergency funds over and over. But it was a real lifesaver during those months when I would earn only P12,000 and had to feed and pay for a household of 3 people, and my tuition too.

Don’t undersell yourself. I used to charge $5.00 for a 500 word article. That’s okay as a starting point just to build up your folio, but I stayed around that price range for one or two years, even after I was getting so many happy testimonials from clients who kept referring me to others (meaning: my work was worth more than $5). Hindi ka talaga mabubuhay kung $5.00 per hour ang singil mo. Especially since I had dependents. It took me a while to realize that people aren’t just paying for the words I write, they’re paying for an hour of my life and the unique insight I bring to the table. Does that really just cost $5?

Competing with others on the basis of price alone isn’t a sound business model. Someone will always be cheaper than you! So I competed on quality and experience, and can now turn down work that I don’t find interesting.

Every job title, every industry presents its own unique money lessons. What are the money lessons you’ve learned as a result of your work? Please share them with other Frugal Pinoy readers