How to make money from the sharing economy

How to make money from the sharing economy

There’s never been an easier time to earn some extra income or even launch a side hustle.

Thanks to the fast-growing ‘sharing economy’, you can now market products to large numbers of people over the internet – quickly, easily and cheaply.

The idea is to make money from things that would otherwise go unused, such as vehicles, bedrooms, carports, garages, clothing, bikes and skis.

You can even capitalise on cash that’s sitting idly in your bank account or knowledge that’s going unused in your head.

The sharing economy allows people to earn a second income or begin their own home-based business.

How? Here are five ways you can cash in.

Make money with your home

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You can turn your home into a hotel with services like Airbnb, Short Term Stays, RoomORama and CampinmyGarden.

You can turn your home into a storage facility with Spacer – or even a commercial office with LiquidSpace.

You can also turn your home into a carpark with Parking Australia, Parkhound and Findacarpark.

If you have spare room and you love dogs, you can turn your home into a boarding kennel with DogVacay and Pawshake.

Make money with your vehicle

One way you can earn income from your car is to become a taxi driver with services like Uber and GoCatch.

You can also make some extra money by renting out your car through Car Next Door and DriveMyCar.

If you have a truck or van and you want to do some courier work on the side, you can register with uShip.

Make money with your possessions

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If you’ve got a bike, surfboard, stand-up paddleboard, snowboard or skis gathering dust at home, you can rent them out with Spinlister.

If you’re a woman with an overflowing closet, you can rent out spare items with Style Lend.

Make money with your knowledge

Anyone who can do computer-related jobs like writing, programing, translating and video editing can market their talents through sites like Fiverr and Freelancer.com.

Other options are to become an online tutor with Wyzant or create an online learning course with Udemy.

Make money with your money

Instead of putting your spare cash in a savings account or using it to buy shares, you can invest it through what are known as peer-to-peer lenders or lending marketplaces.

Services like Harmoney, Marketlend, RateSetter, SocietyOne and ThinCats allow you to earn interest by lending money to individuals and businesses.

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Learn more about savings accounts

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details