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Personal Finance

How to Make Money Without a Job

Are you one of millions of Americans who've lost a job, been furloughed, closed a business or seen a decline in household income over the past year? Or, like many parents, maybe you've had to take a step back to stay home with kids while schools are closed to in-person learning. If so, you're not alone.

Planning your budget without a formal "9 to 5" job and the steady paycheck that comes with it is often a challenge. Fortunately, you may be able to make money that supplements your income now, and could possibly even lead to future career opportunities. Here are a few ideas to get you started.

Sell Clothing and Other Items Online

Your closet may be overflowing with items that no longer fit, or that you're simply not in love with anymore. Kids are a nearly unending source of outgrown clothing and shoes, some of which may have been worn just once or twice. You can sell lightly used (or like-new) clothing online and make extra money from the comfort of your home. Online marketplaces such as Poshmark and thredUP make it easy to market your goods and find a buyer. To sell successfully, consider these easy tips:

  • Present your items in top condition. They should be clean and wrinkle-free.
  • Take high-quality pics. Use good lighting and take shots from a variety of angles that really show off the article of clothing.
  • Price your items to sell. Listing at a high price may exclude you from searches.
  • Write a quality description. Let buyers know you're selling the perfect jeans for working from home, the most charming flower girl dress or the suit that wins the job.

You aren't limited to the clothes in your closet. If you have an eye for bargains, you may be able to shop thrift or discount stores and resell your items online. Apps like Mercari and Letgo help you sell furniture, appliances or household goods locally. Or check out listing opportunities on Facebook Marketplace, Nextdoor, eBay and Craigslist. If you have useful items you no longer need or want, chances are good there's an online marketplace where you can sell it.

Apply for Unemployment

If you've lost your job through no fault of your own, you may be eligible for unemployment benefits. Each state operates its own system, so eligibility requirements and benefits may vary depending on your location. Unemployment insurance typically won't cover you if you've quit your job, been fired, are an independent contractor or haven't worked at a job long enough to qualify.

Unemployment benefits are meant to provide temporary support while you are between jobs. To that end, benefits don't last forever. In many states, unemployment benefits run out after 26 weeks; in some states, they can last as little as 12 weeks. During extraordinary times, the federal government may supplement and extend unemployment benefits, as they have done during the COVID-19 pandemic.

Although unemployment benefits aren't a permanent substitute for gainful employment, they can be a critical lifeline for anyone who's between jobs. If you're also trying to make sure your credit stays in great shape, rest assured that collecting unemployment benefits doesn't affect your credit in any way. Unemployment benefit payments do not appear on your credit report and have no bearing on your credit score.

Cut Costs and Manage Payments When You're Unemployed

If you've lost your job or your income has been reduced, now is a critical time to set a budget and get control of your finances. You may be limited in the ways you can bring in more money to your household budget, but you have a great deal of control over what you spend. When cutting costs, you'll focus on the things you can change, since expenses including your rent, utilities and other bills aren't very flexible. Think: streaming subscriptions, gym memberships and other bills considered discretionary. Here's how to start:

  • Re-evaluate your income. Calculate how much money you expect to receive each month.
  • Take stock of your essential expenses. How much do you need monthly for unavoidable costs such as housing, utilities, medical insurance and medical care, food, car expenses and credit card payments? Look at how you can reduce what you pay, as well. For instance, you may be able to reduce what you pay for car insurance, or spend less on groceries.
  • Minimize non-essential expenses. Find ways to cut back where you can—even temporarily. You can always make those purchases again later on once you're able to make it work with your budget.

Sometimes, despite your best efforts, making every bill payment may not be possible. If you think you're about to fall short, contact your lenders, credit card companies, utilities and other creditors right away to let them know you're experiencing hardship. They may have accommodations that will help.

Keep an eye on your credit as well. Losing your job can affect your credit if you have trouble making your regular debt payments. When it comes to credit cards and loans, every payment counts: Payment history is an influential factor in determining your credit score and payments that are 30 days or more past due can remain on your credit report for as long as seven years.

Should You Start Investing?

Investing has certainly been in the news this year, which has put a spotlight on scores of individual investors trading stocks for fun and maybe even profit. In fact, it's not just short-term stock trading that is in play: From Bitcoin to foreign exchange trading, investing has become a hot topic and a potential source of income among everyday people.

Could this be for you?

Investing can be a valuable source of passive income, but it's also a risky way to make money. If you're intrigued by the possibility of making money on investments, be sure to take the time to understand the full range of options available and what their pros and cons might be.

Traditional long-term investments—like the ones that help you save for retirement—deploy a few common tactics to reduce risk:

  • Diversifying investments: A typical retirement or long-term investment fund contains a mix of stocks and bonds. You may further diversify by choosing mutual funds, which allow you to own many individual stocks and bonds in a single holding.
  • Leveraging time for stability: Although the stock market fluctuates constantly, in the long term it trends upward. That's why timing long-term investments is less risky: It's easier to predict a long-term gain than to pinpoint what an investment will do in the next few days, weeks or months.
  • Being conservative in the short term: Conservative short-term investments tend to be less volatile but may also yield less profit. High-yield savings accounts, for example, are designed to preserve your money, not make you rich overnight.

Short-term trading doesn't really operate on these principles. Instead, they rely on quick wins that can be turned into bigger investments. Can you make money doing this type of trading? Potentially, yes. But you can also lose a lot of money, which is especially catastrophic if you're already in financial straits.

If you've considered all the risks and are still interested in this type of investing, you might first try your hand using a simulator and fake cash. Be prepared to invest a lot of time learning how trading works and keeping up with news about the market. Start small. Don't invest money you can't afford to lose. And be ready to track your earnings so you can pay taxes on them.

Consider Starting a Business

Is now really a good time to start a business? Opportunity sometimes springs out of extraordinary circumstances. For many who have been furloughed or laid off during the pandemic—or who've needed to stay home with school-age children—necessity has been a motivator. If you have in-demand skills to share, a sure-fire product or service idea and the resources to launch and market a business, starting your own business could be more feasible than you think. Ask yourself these questions:

Do you have a skill you can market? Suppose you've been laid off from your job as a human resources manager. Could you outsource your skills to local businesses by the hour? You might be able to recoup your income and retain the flexibility to work from home and set your own hours.

Do you have an idea that solves a problem? Maybe you've invented a marketable product. Or you've cooked up the perfect recipe for a mobile, contact-free dessert delivery service. You may even see an opportunity to step into a local business someone is trying to sell. While it's essential to think through the market challenges of starting a business in 2021, viable markets still exist. Your pandemic business idea may still have legs once the pandemic is over, or you may be able to evolve as the market changes.

Are you the right person to make this business succeed? Having the right work ethic, enthusiasm, business knowledge and even a network of supportive mentors can all contribute toward your success as a business owner. So, too, can access to capital. Though it can be tough to qualify for a startup loan, it is possible to get a loan to start a business—or to purchase an existing business.

Creating Options for the Future

Starting a business, learning to invest or making side money as a reseller can help you generate needed income when you don't have a job. But these endeavors may also provide helpful income after you've found new work. If you start a successful business, you may not even need another job.

Being able to generate additional income can also help you preserve your good credit through difficult financial times. Although keeping up with payments can be difficult when your income is disrupted, working with creditors and monitoring your credit can help you ensure that you come through an income downturn in the best possible financial shape.