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The week’s most interesting and impactful posts about financial lifestyle.
Like almost everyone in America, I fill my spare time with a number of projects and a handful of hobbies. I have a number of things I’ve consistently enjoyed over the years – reading books comes to mind, as does computer programming – as well as hobbies that I’ve jumped into passionately for a while and then burnt out on – golf comes to mind, as does geocaching.
Income-Positive Versus Income-Negative
The problem is that the vast majority of hobbies and projects out there are “income-negative.” In other words, those hobbies consume money instead of creating it.
Many of my hobbies certainly fall into this category. While I do strive to keep the financial implications low – I try to spend roughly $1 per hour of hobby enjoyment – most of my hobbies are still income-negative.
Of course, on the flip side of that coin are hobbies which are “income-positive.” These are hobbies that you engage in that happen to earn you a bit of money along the way. The goal of such a hobby isn’t to earn money, but if it incidentally happens, it’s a perk. Sometimes, it can be a way to “keep score” within your hobby.
Income-Positive Hobby or Side Business?
It’s often hard to see the line between an income-positive hobby and a side business. For me, the difference is simple.
If you would do this anyway even if you didn’t earn a few bucks from it, it’s an income-positive hobby. For example, my aunt used to walk in the woods for hours hunting for geodes when I was a child. She would do this whether or not she found any geodes or not, simply because she enjoyed walking in the woods and she enjoyed the beautiful rocks she discovered. She put minimal time into salesmanship – she simply hung a “Geodes For Sale” sign out on her property, left the geodes out on a table, and had a box where people could leave what they wanted (she had a “suggested $5 per geode” sign there, too). She’d just put the geodes she found on that table and then checked the cash box every once in a while.
If you wouldn’t do it if it wasn’t for the income, then it’s a side business. I know many bloggers who keep blogging because they really like having that income stream. Their initial passion for blogging has withered, but they keep doing it because they see the five to ten hours per week that they invest as a simple way to maintain that income stream. They’d rather be doing something else, all things equal, but that income stream – even if it’s less than minimum wage for their time investment – keeps them going.
Another example of a side business that is no longer an income-positive hobby comes from a friend who makes wooden outdoor furniture. He loves to tinker in his wood shop and he made some nice deck furniture for himself. Some people wanted to buy them, so he started making and selling them… but he’d rather be making other things in his shop than these repetitive deck chairs.