As a college student, I don’t think I have enough savings to begin investing in the stock market, but I’d like to start generating passive income before I graduate. What is the best way to go about doing this?

Passive income typically comes from one of three sources:  (1) Real estate, (2) A business with a recurring/automatic sales cycle, or (3) Investment income.

As to which one is “best”–it’s just like that classic beer commercial where people are arguing “less filling” vs. “tastes great” about Bud Light beer. There’s not an absolute answer. But becoming a real estate investor requires some degree of upfront capital.

So then we move on to options two and three. While it is possible to come up with a business idea from which you could generate recurring sales with very little upfront cost… it’s not easy. If you have a great idea for some sort of product or service, by all means give it a go.

But to me, I’d encourage you to think about option three. While you may think you need tons of money to start “investing,” the truth is you can start purchasing dividend paying mutual funds and ETF in fairly small increments. Even investing in an S&P 500 index fund or ETF right now will generate a roughly 2% dividend yield. That may not sound like a lot, but held over the long run, that annual dividend will grow over time. If you do this by investing in your Roth IRA while you are young–meaning, start now!–you are positioning yourself to have a nice passive stream of dividend income down the road on a tax-advantaged basis to boot.

Also, if you have credit card debt, paying off that debt, in a sense, is a hybrid form of generating passive income in that by paying off that debt you are guaranteeing that you aren’t paying that interest rate either.

So while I wish I could give you a magic prescription for creating passive income out of thin air, in the vast majority of cases, it is done through one of these three pathways.

Congratulations on developing a business concept!  Now it’s time to take action on your idea. Join us for the first video chat in “The Seven Sees for Aspiring Entrepreneurs”, a series geared to helping you launch your company !

Money is the roadblock that prevents most aspiring entrepreneurs from taking that first crucial step. Wondering whether you should get a loan from a bank? Finance it yourself? Borrow money from a friend?

Crowdfunding websites, such as IndieGoGo, help you raise money for your business without a starter fee or application process.

IndieGoGo cofounder Danae Ringelmann will give you tips on how to efficiently use these websites and answer your questions about crowdfunding on 5/23 at 8 pm EST.

Want to join us? Visit Vokle. Hit the “join chat” tab and sign in with your Twitter or Facebook account  !

You have the option to interact either by text or video, or you can sit quietly and just listen to Danae answer audience questions !

When: Wednesday, May 23, 2012

Time:  8-9 PM EST

In Part One of Starting Your Own Business, we talked about settling on a business idea and creating a plan of action. The next step is all about time management. Even with the best idea, a business can’t succeed if there’s no productivity. In this world of social media and ever expanding technology, it’s very easy to get distracted.

Managing your time properly is one of the most important aspects of any business plan. Efficiency, or in other words, getting more done in less time, is the main objective. (Remember, time is money!) As a blogger and entrepreneur, I’ve learned some valuable time management tips and tricks to help any new business.

5 Time Management Tips For Starting Your Own Business

1. Learn to be productive instead of busy

It’s important to learn the difference between just being busy and being productive. Being busy is measured by how long you work, and being productive is measured by the results you achieved in comparison to the overall amount of work. Just because you’re busy all day doesn’t mean you’ve accomplished anything.

Tricks of the trade: Follow the blog Time Management Ninja, which is all about effective time management strategies and career motivation.

2. Focus on the job at hand and stop multi-tasking

Many time management experts state that focusing on one task at a time will double productivity, output and overall performance. When you’re running a small business, this could mean the difference between success and failure. Discipline yourself to stop multi-tasking and focus on the work at hand, by setting a clock or timer. Put all of your energy and thought into the project, until time is up or it’s complete.

Tricks of the trade: Use an online countdown like E.ggTimer.com to keep track of your time.

3. Start each day with fresh goals and new to-do lists

Some people like to keep a running list of task and errands, but I prefer to start each day with a new list and new set of daily goals. This gives me motivation to complete more items on my checklist today, so I don’t have to put them on tomorrow’s to-do list. Break up your day into more attainable chunks, by setting goals for before lunch and after lunch, with the more important ones slated before lunch.

Tricks of the trade: Some experts believe it’s better to create a list the night before. That way you can start the next day fully prepared, rather than wasting time deciding which projects and tasks need attention.

4. Reduce the amount of interruptions and distractions

Limiting the amount of distractions can be difficult; there is always something that needs our attention. Don’t check your email until you’ve done your most important task of the day. I give myself two hours before I even look at my inbox, because once I do, my agenda is no longer my own. It’s all about answering emails, doing tasks others need and following up on projects.

Tricks of the trade: Close all social media and Internet browsers. You can also place a “limit” on the amount of Internet browsing by installing an extension plug-in.

5. Always use simple but effective accounting programs (for free)

As a small business accountant, one of the most time consuming things I’ve seen for business owners is the lack of proper accounting. Having the proper accounting program can save you a lot of extra money, but most importantly it can save you time and headaches.

Tricks of the trade: Use Outright Accounting, Wave Accounting or Freshbooks, all of which are free.

Be Prepared From the Beginning When Starting Your Own Business

Time management is a simple but very important factor to any start-up business. Once you lay the right foundation, it’s easy to build and add on, as your company grows. Being prepared, organized, and disciplined from the get-go will give you the time necessary to become more productive, which will ultimately lead to more money. It will also increase your chances of becoming a very successful business owner.

Did you miss this Wednesday’s fast paced #momsdaymoney chat in honor of Mother’s Day? Talking about money with family can sometimes be awkward. Over the course of an hour we got the difficult conversation started. We covered those money questions you might like to ask your mom, or the answers you would like to share with your daughter.  We talked about the ways you and your mother are just alike, and the ways you are oh-so-completely different, when it comes to making choices about your money.

Our co-hosts for the evening Eleanor Blayney, CFP (@directions4her), and Candice McGarvey (@CMcGarvey) both from Directions for Women. Directions for Women seeks to empower, educate, and engage women in the management of their personal finances. These ladies are incredible and definitely two you want to be following.

We hope you’ll join us for our next chat in June (stay tuned for more details!).

In the meantime, here are a few highlights from Wednesday night.

#MomsDayMoney Chat

On talking about money with one (or both) parents….

Storified by GoGirl Finance · Thu, May 10 2012 20:40:24

What are some good habits I could start now with respect to my finances?

There are three key things I recommend doing while you are in college to start incorporating financial wellness into part of your ongoing self-care practice.

Do no more harm. So many 20-somethings are graduating from college with staggering debt burdens. Don’t make this worse by using credit cards to buy items you don’t really need or can’t afford to pay off in full when the bill comes.

Adopt a mantra of mine: “Forget diamonds, financial knowledge is a girl’s best friend.” Very few academic institutions teach personal finance. If yours does, take advantage of it. If not, I encourage you to do some research on your own and read a basic personal finance book such as On My Own Two Feet, or consider taking a low-cost online personal finance class, such as the one I offer called “Money Rules.”

Talk honestly about money. And I mean with your parents, siblings, friends, romantic partners, as well as people you can learn from. Money is such a taboo topic, so it can be hard to start cold. I recommend once a quarter reaching out to someone who is older and asking if they will spend 15-20 minutes sharing with you what they wish they had known about money at your age. You’ll be amazed at how much you learn from the conversation.

My Experience With Preparing for a Baby Financially

When I was pregnant with my son, like most moms, I became obsessed with making sure I had everything ready for the new bundle of joy that would soon turn our lives upside down. We cleared out our spare bedroom, purchased baby furniture, strollers and onesies, and researched the safest car seat. Then, when I was about six months pregnant, I read about other critical must-haves expecting parents often overlook, including a will and life insurance.

That day, I told my husband we needed to have them both. He thought I was going a bit overboard with the nesting and baby prep, but I was determined and he obliged.

Three months after our son was born, my husband was diagnosed with an aggressive form of testicular cancer. Less than 18 months later, he was gone.

Three Things You Should Consider When Preparing For Baby

1. Life Insurance

When looking into purchasing life insurance–an experience we both found depressing and morbid–we never expected to use it, at least not anytime soon. We were sold on the fact that since we were purchasing it when we were both young and healthy, it would cost very little for both of our policies. This meant we barely saw a difference in our monthly finances, but also did not have to worry about it later as we aged.

After my husband had undergone failed treatments, when we were exploring experimental treatments and his prognosis was poor, we learned about clauses built in to our policies that allowed us to use some of the money on medical expenses in the case of a life threatening illness. This was incredibly helpful and gave me peace of mind, that even though the treatments did not work in the end, I know we did everything possible to try and beat the disease. You just can’t pay for that kind of peace of mind.

2. Wills and Trust Funds

When your family is going through a difficult time, the last thing you want to think about is dealing with the legal system. We had our wishes put in writing–for a relatively inexpensive fee due to the fact that we were looking for a basic will.

We also created a trust for our son when he was born. Don’t confuse this term with the rich “Trust Fund Kids;” trusts are needed for any minor child. If something were to happen to you and your spouse, this will dictate how and when the money is used, controlled and given to your child when they get older, among other technicalities. Be sure to ask your lawyer about this important piece when preparing your will.

3. A College Fund

While an official college fund cannot be started until the child is born, it is helpful to do your research on which college fund you plan to open. There are so many options–from prepaid state plans to 529 savings plans–that it can be overwhelming. Do your research early, and then finalize the details after the baby is born when registering them for your medical insurance and their Social Security cards. This way, it doesn’t get lost in the shuffle of nighttime feedings and doctors appointments, but gets done before your baby starts hitting his or her milestones. The sooner, the better.

While these may not be the most exciting things to consider when preparing for a baby, they are important. I never would have imagined needing them so soon, but shudder to think about what could have happened if we had waited.

Holly Gordon is Executive Director of 10×10, a global campaign for girls’ education, and an Executive Producer of the upcoming feature film at the heart of 10×10. The 10 x 10 feature film, produced by the team behind legendary broadcaster, Peter Jennings, stands to  improve the lives of billions of of people around the world by shining a light on the importance of educating girls in developing countries.

Married mom of two, Holly’s professional journey began with an entry-level job as assistant to the executive producer at World News Tonight. By the end of her 12-year tenure at ABC News, she was a producer for PrimeTime and 20/20. After a brief foray into the children’s food business and two years as Director of Content for the world-renowned Tribeca Film Festival, Holly landed at 10×10 where she has parlayed her formidable story telling skills into a global movement that’s driving powerful social change.

Recently, Holly took some time out from her insane schedule to chat with GoGirl about the lessons she’s learned along the way—and to deliver some hard-won advice to young working women.

You’ve tweeted so many things about women and finance lately, it’s like you’ve had GoGirl on your mind! One of your tweets referenced the importance of having work-life balance. What does that phrase mean to you?

It means, ideally, that you work within an organization where your responsibilities to your home life are respected and you are valued for your contribution to the organization, as opposed to things like face time. The childcare burden is really a significant one. In most families, women continue to be responsible for managing the family life, even when their jobs are incredibly demanding. It always feels like something’s got to give.

When you have kids, you begin to have to compromise the kind of job that you can take. It’s hard to find rewarding work that pays at the proper level. That’s enormous value lost to businesses. I would encourage highly-trained individuals to look online, because there are websites where you can find opportunities to work within your timeframe that will take advantage of your education.

That’s great advice. You also tweeted, “Women gain power when they are economically independent.” Can you expand on that?

For a very short period, I didn’t work, and I felt the balance of power shift, however imperceptibly, without my own income. I have a wonderful husband; he’s never told me that I can’t do anything. But immediately, when you’re not earning your money, you’re asking somebody else if you can spend theirs.

It’s an idea that my mother impressed upon me. She said, “Holly, you must always have an income. Because when you don’t have an income, you will always have to ask for permission. Whether it be buying a sweater, taking a taxi, or going out with your friends, if you did not earn that money, you will have to ask permission to spend it.”

While we’re on the subject of economic independence, what are your thoughts on financial literacy?

Financial literacy is freedom. Because if you don’t understand how to manage your money, if you don’t understand how much it costs for you to survive, then you can’t calibrate your life properly. Having control over your own finances is the key to being a responsible citizen of the modern world. It gives you self-determination. It gives you power, choices, and freedom.

Can you talk about the importance of networking for women?

Networking is vital, whether you’re a man or a woman. At the end of the day, it’s all about making something happen. It’s about finding your allies, your mentors, your advisors, finding those people that you can rely on to give you honest feedback or a leg up, or to remember you when something crosses their desk. You can’t give business to somebody you don’t know exists.

What are your network-building tips?

Be open. Be loyal. Loyalty is really important, and it’s not talked about enough. Don’t speak badly about people, ever. Follow up. Reach out. Introduce yourself. Be brave.

And be consistent. When someone’s in your network, make sure you tickle them every now and then. Tweet to them. Ping them. Send them a text message. Drop them a call here and there. We have so many new ways to stay connected. You just have to make time for it.

Okay, let’s get into mentoring. What makes a good mentor?

Being a good mentor is about being really direct and trying to help young people understand that good work is often not enough, that you also have to understand politics and community and where you fit within an organization. And that it’s good to be humble.

People don’t hear that enough.

No. Especially not the generation that’s coming up. Humility is really important. It’s the delicate balance between sharing your good ideas but also being respectful of the people around you who’ve been doing it much longer than you.

Let’s move on to 10×10. Your Twitter bio says you’re passionate about it. Why is it so important to be passionate about what you’re doing, as opposed to simply involved?

Passion makes you go much further than you ever would go without it. Having passion gives you the strength, the determination, the energy—it takes an enormous amount of energy to lead a project—to get out of bed every morning and put on your gloves and go fight the next round.

When you’re thinking about what work you want to be doing, think about whether you’d do it for free. If you can say yes to that, then you’re in the right line of work. If you’re not sure, then look at what you are doing for free. Think about the stuff you do when no one’s looking because you just love doing it. See if you can make a job out of that.

Any advice for women who are struggling to get financial backing?

It takes a really well-thought-out plan. I worked for eight months to a year on creating the infrastructure around 10×10 before we asked for funding the first time. I would talk to people about it and they would ask me questions. Anytime I couldn’t answer a question that was critical to getting their support, I said, “Okay, we’re not ready. Better go answer that question.”

Why is it important to develop strategic partnerships?

Collaboration creates better ideas. I think people are really wary about sharing ideas. I almost started a business once, and in every book I read, it said, “Be generous with your ideas, because no one’s going to steal your idea. Everyone’s going to be doing their own.” That’s really smart advice. Partnership and collaboration makes things achievable.

What business lessons did you learn during your tenure at ABC?

Getting an assignment and figuring out how to do it. Not being afraid to get on the phone and make phone calls. I think people rely on e-mails way too much today. Get on the phone, report your story, don’t take no for an answer. Take risks. I had to knock on perfect strangers’ doors and ask them to be on TV. There’s nothing like that for getting over your fears!

I have a point to make around my experience in television news: If you think that your industry is changing dramatically, if you’re looking ahead into the next four or five years and all signs point to innovation out-pacing the current structural model—if you smell the end—start to think about how to reinvent yourself. Don’t wait until you’re forced to reinvent yourself. The other point is, I loved ABC News. I still feel like the people there are my family. But: Don’t be afraid to leave.

Why did you leave?

It was partially work-life balance, honestly. I had just dropped my child off for preschool, we had just come home from a family vacation, I hadn’t unpacked, there was no food in the fridge. And I got paged at 10 a.m. and asked to go to West Virginia. I had worked hard at ABC to create a reputation of excellence, and I was afraid that if I said, “You know what? I have two kids; I can’t work at this pace anymore,” I would damage my reputation. I did not want to tarnish my reputation because of my work-life balance needs. So I decided to leave.

What other points on your career path stand out in your mind?

I actually left ABC to start a children’s food business with a friend. There were two financial lessons there. One was, make sure that you’re looking at everything going badly as your model, because chances are that things won’t go as well as you want them to go.

The other lesson was that, in the end, we decided not to start the business. It wasn’t just the numbers; it was the barriers to success that were out of our control. Sometimes not doing something is the best decision you can make. Deciding not to do something even though you’ve invested an enormous amount of time and energy into it is not failure. It’s success!

Links: http://10x10act.org/

Celebrate Mother’s Day by beginning an important conversation with your mother or daughter. You’ve supported each other through the life’s sunniest days and coldest nights. Now it’s time to open a new chapter of your mother/daughter relationship. It’s time to talk about money.

Those were the days when she was little enough to believe Mom could hold the sun in her hand. But now the two of you can tackle the money world together. Just give it a chance.

Not sure where to begin?  Think about all those money questions you might like to ask your mom, or the answers you would like to share with your daughter.  Think about the ways you are just alike, and the ways you are oh-so-completely different, when it comes to making choices about your money.

We’ll take care of the conversation starters; All you need to do is register with your Twitter accounts. Moms and daughters can plan to show up together, not necessarily in the same geographic location, but in the same virtual online room! Or if you can’t make it together, one of you can participate and make note of the discussion topics we pose. You’ll learn a great deal about your approach to finance and ways to improve it.

Just think, this event could have lasting significance for the two of you, and it won’t cost a thing.

When: Wednesday, May 9, 2012

Time: 9-10PM EST

Party Hosts: @GoGirlFinance, along with Eleanor Blayney, CFP (@directions4her), and Candice McGarvey (@CMcGarvey) both from Directions for Women. Directions for Women seeks to empower, educate, and engage women in the management of their personal finances.

Twitter Hashtag: #MomsDayMoney

Don’t forget to RSVP with your Twitter handle to be eligible for prizes (see the linky below!). You must be following both hosts and be present (and tweeting!) for the party in order to qualify for prizes. Winners will be picked at random using random.org and will be announced during the party. You will receive a Direct Message requesting your contact and mailing information.

(To sign up for this Linky, make sure your link title is your Twitter Handle, and your URL is the link to your Twitter Profile.)

How do I go about building a good credit score? Do I have to start now, or can I put it off until I’m older?

Your credit score is a three-digit number that summarizes how financially responsible you are, according to the criteria set by the credit bureaus. Broadly speaking, scores can range from 350 to 800; higher is better. Your credit score is an important number because it can determine not only how much you’d be charged to borrow money for things like a home or a car, but increasingly landlords use them to decide if they want to rent to you, employers in certain industries may check them before extending offers, and even insurance companies are starting to factor them to their pricing calculations. The underlying assumption is that if you are not responsible with your money, you may not be responsible in other areas either.

There are a variety of factors that drive your credit score, but thankfully three of them account for 80%. So nail those and you’re well on your way.

• The first is how timely you are at paying your bills. One late credit card payment can potentially knock a whopping 100 points off your credit score! This accounts for 35% of your score.
• The next big item is your “debt utilization ratio.” It works like this. Say you have a credit card with a $1,000 limit. If you carry a $500 balance (and I hope you don’t because that’s a very expensive way to borrow money) your debt utilization ratio is 50% (debt outstanding divided by credit limit). In an ideal world, the highest you’d let this get is 30%. This component accounts for 30% of you credit score.
• The remaining 15% comes from the length of your credit history. The longer your track record, the better your credit score.

What’s the bottom line if you are in college? Start building good credit by having one credit card in your name that you charge something to monthly that you would be buying anyway and then always paying that bill off on time. Do that and you’ll be hitting the top three factors that influence credit scoring.

I was 25, still living with my parents, had a steady job, no boyfriend, and a heck of a lot of student loans. As much fun as I was having going out with my friends every weekend and blowing through every miniscule paycheck I received, I was deeply unhappy and plagued with the question: What do I want to do with my life?

Three years later, I’m 28, married, have a dog, rent a townhome and am at a job where I see myself staying until I retire. A lot can happen in three years. I didn’t see it three years ago, but I was going through something everybody goes through. It’s called “life.” Maybe you’ve heard of it?

The quarter life crisis and being scared of the unknown

In my case, I nicknamed this tumultuous time of my life “the quarter-life crisis.”

I was in such a rush to be at a place where I wasn’t constantly in flux that I wasn’t enjoying the process of living through my 20’s. In fact, my 20’s had turned out to be the antithesis of what I had envisioned. I wasn’t going out every night, meeting the man of my dreams, landing my dream job and living it up in my red convertible which I had bought with all the cash I was making. Where was my Prince Charming? Why was I still struggling to make ends meet? Why couldn’t I afford to move out on my own while all my other friends seemed so put together?

Comparing myself to others was a recipe for disaster. Everyone has their own financial circumstances that can affect their socio-economic status (I personally liked to believe that everyone except me had inherited some vast fortune—but you know, whatever works for you). I felt like my career—for the whole three years I had been working since I graduated college—had been sputtering along.

It’s okay to feel lost sometimes

“Is this all there is?” I would ask myself.

I was in such a rush to get to where I was going, that I wasn’t stopping to enjoy the present. Of course, it’s always easier to look behind you and say “I’m glad that’s over.” Now that I’m married and have settled down a little bit, I am really taking the time to just enjoy my everyday life. I’m in no rush to have kids, and I’m content with working my way slowly up the corporate ladder. I’d like to buy a house, but I see that as a goal we can accomplish in a few years—not something that needs to happen right this instant.

Surviving the quarter life crisis is about a few key pieces of wisdom

1. Take one day at a time: It’s completely acceptable to not know everything and to just enjoy the present moment. The struggles of interviewing for jobs and going on a ton of bad dates are the kinds of things that build character.

2. Be proud of your choices: I work a desk job. For some reason, I felt that for my life to have meaning, I had to work at finding the cure for AIDS or feeding starving children in Africa. But it’s okay to work a nine-to-five. I love a steady paycheck and I love that my work doesn’t come home with me after 5 p.m. Just because I’m not contributing to world peace doesn’t mean that what I do doesn’t have meaning. I’ve just found my true happiness in something other than my career.

3. Have personal goals and financial goals and work toward them: It can be too easy to just constantly walk around in a state of confusion. Fight off a case of the woe-is-me’s by creating goals for yourself and sticking to them. Revamp your resume, attend networking events, go on a blind date—whatever it is, do something that takes you out of your comfort zone and gets you one step closer to where you want to be.