7 Best Side Income Streams For Developers In 2023

July 15, 2023

In this post, I will discuss the best ways to build up a side income streams for developers in 2023. The great thing is that it doesn't require any level of experience or knowledge, it's open for everyone, from junior software devs just entering the industry, all the way up to seasoned, senior engineers who can code in their sleep. I've personally used all of these in one form or another, so let's get started!

What Is The Best Side Income Stream For Developers In 2023?

Side income streams are constantly becoming more important. With massive layoffs and an ever-changing job market, now is the second-best time to start building a second source of income. The best time, of course, was yesterday! Let's have a look at some of the top side hustles to start in 2023 to replace some or all of your salary.

Here are my top 7 side income streams for developers starting out in 2023:

1. Real Estate

Real estate is one of the best investments to make in 2023. All you need a casual €50K to drop on a deposit and you're good to go, right? Fortunately, that's not quite true anymore.

Through Real Estate Investment Platforms like Reinvest24 or Estateguru, you can invest as little as €100 in a property, lowering the bar to entry for many of us who don't yet have 50+ thousand lying around to invest with. The interest rates on these properties can also hit around 16%, which beats out savings accounts with practically every bank by at least 400%, if not more!

They say one of the wisest moves when beginning to invest is to diversify your portfolio. With low investment thresholds, it's easy to start diversifying early, spreading your money between the various investment properties that the Investment Platforms have to offer.

The high interest rates, low barrier to entry and easy diversification are the reasons why this is our number one pick on the list of best side income sources for developers in 2023.

Pros

low barrier to entry - €100
good interest rates - 14% or more
low default rate
easy diversification with many properties to choose from
completely passive side income

Cons

potential for default leading to uncertain ROI

Get started with Reinvest24.

2. Fixed-Term Deposits

Fixed-term deposits are savings account where you lock away your money for a fixed-term that you can choose. The duration of the term and the bank will determine the interest, where longer terms typically result in higher interest rates.

In 2022, these deposits were not worth the effort, with interest rates far lower than 1% for 12 month terms. However, as interest rates have begun to climb in 2023, reaching almost 4% for a 12 month term and even crossing 3% for 6 months.

The drawback to fixed-term deposits is that your money is tied up and you won't be able to access it for the entire duration, meaning it should only be used with non-emergency funds.

The benefit is that your money is safe. Large banks in the EU have a deposit insurance up to €100,000, making them a very secure investment, albeit not at the highest interest rates.

Pros

fixed interest rate
secure with deposits up to €100K
completely passive side income

Cons

money locked away for the entire duration
lower interest rates than real estate or P2P lending
setup required for each investment

Here in Germany, a leading comparison site for financial products is Check24 (available only in German) where you can get information on the current interest rates.

3. Dividend Stocks

Dividends are like miniature bonuses that companies pay to their shareholders. The amount of the dividend is fixed per share, meaning the more shares you own, the higher your dividend will be.

There is a slight catch that most new investors are not aware of, which is that price of the stock decreases by the dividend amount on the ex-dividend date. The ex-dividend date is the date where the ownership is determined for the payment of the dividend. If you own the stock before the ex-dividend date, you get the dividend payment. If you buy the stock on or after the ex-dividend date, whoever sold the stock to you will receive the dividend payment.

That said, the benefits of dividend stocks are clear. You earn passive income from the stocks just from owning them. The more you own, the more you earn, so repurchasing stocks with dividend payments is also a common practice, known as reinvesting, as it allows you to tap into compounding growth. The more you earn, the higher the dividend, the more you buy, the higher your dividend, and so on and so forth.

The drawback is that dividends are not usually high yield. A common dividend will be around 2% annually. Paid quarterly, this means that each dividend payment will be a measley 0.5% of your total invested - growth is pretty slow at that rate. That's assuming the dividend rate stays the same. Companies that are doing poorly can slash their dividends at any point, so you'll need to keep track of the dividend percentages.

Another potential gotcha with dividend stocks is that, at the end of the day, they're still stocks! Stocks can lose value, so before investing, it's important to understand the company you're buying into, and at least be confident that it won't lose value. If you gain €50 in dividends in the same time that the stock loses €50, then you've done nothing but stand still. The stock value could drop by even more than the amount you're receiving in dividends. Take care when choosing the right ones.

If you don't want to worry about choosing the right stocks, there are ETFs that bundle together dozens or sometimes hundreds of dividend-paying companies together and pay out the collective dividends. There is a still a risk, but it's an easy way to quickly diversify your dividend stock portfolio and leave the management to the ETF managers.

A great tool I like to use is TradeRepublic, an easy-to-use trading application with a user-friendly mobile application and a way to automate your investments on a monthly or weekly basis. It also currently offers a 2% interest on any uninvested funds, meaning you're winning even when you're not investing.

While dividend stocks can be tricky to figure out, it's high on the list for best side income for developers in 2023 because developers tend to be more analytical than most, allowing us to assess the risk and reward of stock market investing better than the average person.

Pros

easy to sign up and start buying
potential for stocks to gain in value as well as paying dividends
completely passive side income
autoinvest feature (on TradeRepublic)

Cons

stocks can lose value
a lot of work up front to determine good stocks
dividend rate can change or be halted

4. Savings Accounts

Coming back to traditional banks with traditional financial products, we have savings account. It's not the best additional source of income in 2023 simply because of the lower rates compared to those above, but the ease of use and low risk are huge benefits that make it an attractive investment for developers who have saved up some additional money and don't know what to do with it.

Once again, my go-to platform is Check24 for accounts in Germany, with interest rates reaching 3.5% annually, which will not exactly keep you up with inflation, but it's a good place to put some money that might need in a hurry. I typically put my emergency fund into a savings account because it's a reserve that I want to be able to draw on very quickly in case I need it. My withdrawals usually take 2 to 3 days.

Savings accounts do not a fixed term, nor is there a waiting period for withdrawing the money beyond the transaction times for the bank transfers involved (it can be 1 or 2 depending on the setup).

Pros

secure with large banks
money always accessible
completely passive side income

Cons

variable rate of interest
lower interest rates

5. P2P Lending

Peer-to-peer lending, or P2P lending is basically just like lending your mate €10 at the bar and asking him to give you €11 next weekend. (Ok, nobody actually does that, but let's say they do.) In a more realistic example, let's say you want to take out a loan for a car, but the bank won't give you the loan for whatever reason. You can use a P2P lending site like Mintos, which then crowdfunds your loan to whoever wants to fund it. The interest rate is higher than with a bank since the P2P lenders are not as secure as banks, so must cover themselves in the case of defaulted loans.

As an investor, you benefit from higher interest loans, sometimes up to 14% or more, but with the caveat that there is less security on them. The default rate can be substantial, but Mintos offers a BuyBack Guarantee - if the loan becomes more than 60 days delinquent, Mintos buys back the loan from you, no questions asked.

The risk involved makes this a less attractive side income source, as it can be unpredictable, but it still makes the list of best income sources for developers in 2023 just by virtue of higher interest rates. Diversification can help to mitigate the risk, and investments as little as €10 are possible (this may differ with other platforms).

Pros

high interest rates
BuyBack Guarantee (Mintos feature)
completely passive side income

Cons

risk of default

6. Freelancing

Freelancing is an obvious choice for getting a side income stream for developers, especially since our skills are so in-demand, even now.

I went full-time as a freelancer in 2021 and haven't looked back since. It's a lucrative endeavour as a software engineer - I've written another post about the pros and cons of freelance software development.

Freelancing is a liberating experience as you become your own boss and can manage your time as you see fit. If you're able to replace some of your salary, it might be possible to cut back to a 4-day or 3-day work week to focus more on freelance income, depending on how open your employer is to that change.

However, freelancing is not for everyone.

The main 2 questions you need to ask yourself are:

Do I have sufficient skills to sell in the current market?
How can I find clients?

The first of these is easy to answer. If you have the skills to be a full-time developer, you have the skills to freelance as well. It may be more or less difficult depending on what they are, but it's possible.

The second question is much more complex. I've had difficulties finding freelance clients, but there are a couple of ideas that will help.

Join freelance networks and platforms

There are a bunch out there including:

I used to spend time trying to get work on Upwork and Fiverr, but the time investment involved was simply not worth it for the low-quality clients that I found. There is also so much competition that the rates have been compressed to a point that it's not worthwhile even if you do find some work through there. I'm happy to be proven wrong, please get in touch if you've had a different experience!

I've had offers and found interesting jobs on all of those listed above, but the standout has to be Toptal. Toptal is a selective network of developers, designers, product managers and other roles that is dedicated to bringing a premium service to its clients. Once accepted into the network following an application process, you will be matched with clients according to your skills and hourly rate, which you can determine and update as you want.

Joining Toptal gave me 2 freelance opportunities, one for some side income and the other as a full-time position when one of my full-time contracts expired. You have a liaison within Toptal that manages the relationship with the client, which removes some of the stress from the normal freelancer-client dynamic, and also guarantees you to get paid for the work you do, even if the client is unwilling to pay.

Network on LinkedIn

It might seem obvious, but networking on LinkedIn makes you visible to potential clients. Last year I committed to posting daily on LinkedIn and, even though I haven't kept it up 100%, boosting engagement with my network and expanding it has brought me two new freelancing client and multiple coaching students (more on that in the Tutoring section below).

It's hard to quantify the effect of networking because it spreads and combines and compounds so quickly, even with minimal effort, but think of it like this: you're on LinkedIn one day, you see posts from a developer content creator. They post frequently and you like their stuff. When you try to think of a developer in your network, their name is bound to be near the top of your mind. Now, think about someone you know from the beginning of your career who isn't on LinkedIn. Unless they were an exceptional software engineer and left a tremendous mark on you, they're unlikely to top of your mind when I ask you to think about a software developer, right?

This is exactly what networking is for. You build a presence, more than anything. Even if all you do is comment and like others' posts, or share links or snippets that are interesting to you. The more visible you are, the more easily you'll be found by potential clients, and the wider your network is, the more easily your posts will spread as your connections like and share them.

The clear drawback of freelancing is that is very much depends on your time. Unlike many of the other secondary sources of income that developers can build in 2023, this is very time-intensive. If you earn per hour, you need to put more hours in to earn more money. This isn't inherently bad, but it's not sustainable in the long term.

Pros

building on your own experience
work with new clients and interesting projects
be your own boss

Cons

effort finding clients
income limited by how much time you have

7. Tutoring

Tutoring is a fun way to build up your second source of income beyond working as a developer. Like freelancing, it takes the skills that you have and puts them to good use, this time to help others.

If you're a senior developer or higher, it can also resemble your job in many ways if you're responsible for managing a team or mentoring junior colleagues.

Tutoring brings with it intense satisfaction that just isn't there for the other developer side hustles and makes it one of favourites, even though I admit I won't be doing it forever.

While I offer my tutoring services through my website and find prospective students on LinkedIn, it's also possible to sign up to a platform like Preply which formalises the tutor/student relationship. The platform's main purpose is language tuition, but they also accept technical professionals to teach their expertise, and building a profile there would be an ideal way to quickly and easily look professional and to have a shareable link to send to students. Preply takes a portion of your hourly rate but provides plenty of tools, such as taking care of the video conferencing software with notes sections for you to use to enhance the tutoring experience.

Personally, my favourite aspect of tutoring has been the connections I've made with my students. Meeting people from different parts of the world with unique experiences has been a wonderful journey and I'm glad I took that step.

I'm not a teacher on Preply, but if you're interesting in joining Preply as a student, you can benefit from 70% off your first lesson!

Pros

using your own experience
doesn't require huge amounts of experience, just students who are one or two years behind you
work with interesting students and meet new people
positively affecting more junior developers

Cons

effort finding students
income limited by how much time you have
not as lucrative as freelancing

Wrap Up

There you have it, the best ways to build a side income stream in 2023.

There are, of course, many other options available, feel free to get in touch if you have had good experiences, I'd love to learn more and update my list.

If I went back a few years to the point where I considered building extra sources of income, I would undoubtedly choose a combination from this list:

Tutoring because you can help anyone who doesn't have as much experience as you - even though it's the least profitable financially, it's a great way to meet interesting people
Real estate because the barrier to entry is low, the threshold for investment is low, it's easy to understand and is relatively secure
Fixed-term deposits because there is next to no risk and it's better than leaving money sitting in the bank earning nothing

A short summary of the various platforms I use:

Reinvest24 - diversified investing in real estate
Check24 - Savings accounts, as well as internet, phone, electricity and insurance
TradeRepublic - investing in stocks and index funds
Mintos - P2P lending
Toptal - freelancing network
Preply - tutoring platform