How a 20-Year-Old Can Start Making Money

For individuals in their early twenties, navigating financial independence often involves balancing commitments like academic pursuits or gaining initial professional experience. Fortunately, numerous avenues exist for generating income. This period presents a valuable opportunity to develop foundational skills and build a financial base. Understanding the diverse possibilities available can empower young adults to identify suitable income streams that align with their circumstances and aspirations.

Securing Part-Time or Entry-Level Employment

Obtaining part-time or entry-level employment offers a structured approach to earning income and gaining valuable work experience. These roles suit individuals balancing other commitments like education, providing a consistent paycheck and professional exposure. Common positions include:

Retail sales
Food service
Administrative assistant
Customer service

Campus jobs like library or research assistant can also provide flexible hours and relevant experience for college students.

Online job boards, company career pages, and professional networking sites are primary resources for discovering available positions. Career fairs hosted by educational institutions or community organizations can connect job seekers directly with potential employers. Leveraging personal and professional networks by informing friends, family, and mentors about job search efforts might uncover unadvertised openings.

Even with limited prior work history, a resume can highlight academic achievements, volunteer experiences, and extracurricular activities that demonstrate transferable skills like teamwork, communication, or problem-solving. A concise cover letter tailored to each job should express genuine interest in the role and company, explaining how existing skills and enthusiasm can benefit the organization.

Researching the company and understanding the job description allows candidates to articulate how their qualifications align with the position’s requirements. Practicing answers to common interview questions, such as discussing strengths, weaknesses, or how past situations were handled, can build confidence. Using the STAR method (Situation, Task, Action, Result) helps structure responses to behavioral questions effectively. Dressing professionally and arriving punctually demonstrate respect and seriousness for the opportunity.

These roles provide more than income; they offer foundational work experience and foster professional skills. Flexible scheduling, particularly in part-time positions, can accommodate academic demands or other personal responsibilities. Income from W-2 employment, where taxes are withheld by the employer, simplifies tax obligations for the employee, as Social Security, Medicare, and income taxes are deducted from each paycheck.

Exploring Freelance and Gig Economy Opportunities

Freelancing and gig economy work represent flexible, project-based income streams outside traditional employment structures. Individuals are generally considered independent contractors, offering services for specific tasks or projects rather than being regular employees. This model provides significant autonomy over one’s schedule and choice of work.

Delivery services for food or packages, ridesharing, and pet-sitting or dog-walking are popular options for active work. For digitally-inclined individuals, available tasks include:

Virtual assistant tasks
Data entry
Transcription
Content moderation
Online tutoring

These roles often require varying levels of skill, from general organizational abilities to specific technical proficiencies.

Digital platforms facilitate connections between gig workers and clients. Examples include Upwork and Fiverr for freelance services like writing, graphic design, and web development. For on-demand services, platforms such as DoorDash and Uber Eats for deliveries, Uber and Lyft for ridesharing, and Rover for pet care are widely used. TaskRabbit connects individuals with local tasks like moving or handyman services.

Getting started on these platforms involves creating a profile that showcases skills, experience, and service offerings. Understanding payment structures, which can vary from hourly rates to per-project fees, is important. Some platforms may take a percentage commission from earnings. Managing time effectively to meet deadlines and balance multiple projects is crucial for success.

As independent contractors, gig workers are responsible for their own taxes, including self-employment taxes, which cover Social Security and Medicare contributions. For 2024, the self-employment tax rate is 15.3% on net earnings from self-employment, comprising 12.4% for Social Security and 2.9% for Medicare. This tax applies to net earnings of $400 or more.

Businesses paying independent contractors $600 or more in a calendar year typically issue a Form 1099-NEC or Form 1099-K. Gig workers must track all income and deductible business expenses, such as mileage, supplies, or equipment, to accurately calculate net earnings and minimize tax liability. Quarterly estimated tax payments may be required if a gig worker expects to owe at least $1,000 in taxes for the year to avoid underpayment penalties.

Building Income Through Online Ventures

Establishing online ventures offers a pathway to generating income with increased independence and scalability beyond traditional gig work. These entrepreneurial endeavors often involve creating digital assets or services that can reach a broad audience. This approach provides a higher degree of control over one’s earning potential and business development.

E-commerce involves selling physical products, ranging from dropshipping or print-on-demand services to selling handmade goods on platforms like Etsy. Content creation, such as blogging, vlogging on platforms like YouTube, or podcasting, allows individuals to monetize their audience through advertising, sponsorships, or affiliate marketing. Creating and selling digital products offers a way to generate passive income once developed. These include:

E-books
Online courses
Templates
Stock media

Offering specialized online services can also form a robust venture. This includes professional services like web design, graphic design, or social media management, which move beyond simple gig tasks into client-based, recurring work. Copywriting and virtual assistance, when offered as a specialized service to multiple clients, also fall into this category. These services leverage specific skills to meet business needs remotely.

Initial steps for these ventures involve identifying a niche or target audience and setting up the necessary digital infrastructure. This might mean choosing an e-commerce platform, creating a professional website, or establishing profiles on relevant social media channels. Building an audience often requires consistent effort in marketing and content delivery.

Online ventures often demand a significant initial time investment before substantial income is generated. Profitability can take time to build, as audience growth and product or service refinement are ongoing processes.

For tax purposes, income from online ventures is generally treated as business income, making individuals responsible for income tax and self-employment taxes on their net earnings. This requires meticulous record-keeping of all revenue and deductible business expenses, such as website hosting fees, marketing costs, or product development expenses. Income and expenses are typically reported on Schedule C (Form 1040) for sole proprietorships. Sales tax obligations may also apply, particularly for e-commerce businesses, depending on customer location and sales volume.

Monetizing Your Skills and Hobbies

Turning existing personal skills, talents, or passions into income-generating activities offers a direct and often rewarding way to earn money. This approach frequently involves providing services or selling creations on a localized or individual scale, leveraging what one already enjoys or excels at. Identifying marketable skills begins with an inventory of one’s abilities, whether musical proficiency, artistic talent, or practical knowledge in areas like car maintenance or gardening.

Teaching or tutoring can involve giving music lessons, language instruction, or academic coaching to local students. Creative individuals can offer:

Photography services for portraits or events
Graphic design for local businesses
Custom art
Handmade crafts like jewelry or baked goods

For those with practical skills, offering services can meet a direct community need, such as:

Yard work
House cleaning
Personal organizing
Minor home repairs

Finding clients or customers for personalized services often relies on word-of-mouth referrals and local advertising. Spreading the word among friends, family, and community members can generate initial interest. Utilizing local social media groups, community bulletin boards, or creating a simple online portfolio can help reach potential clients. Building a positive reputation through quality work is paramount for sustained business.

Pricing services or products involves considering various factors to ensure profitability and market competitiveness. Calculating costs, researching what competitors charge, and understanding what clients are willing to pay are fundamental steps. For services, deciding between an hourly rate or a per-project fee depends on the nature of the work and the value delivered.

While income from hobbies is generally taxable and must be reported on a tax return, it differs from business income in how expenses are treated. For activities considered hobbies, expenses related to generating that income are generally not deductible. If the activity is undertaken with the intention of making a profit, it may qualify as a business, allowing for expense deductions. This distinction affects the net taxable income.