There are lots of says to make money in Second Life, probably more than I'm listing here. You don't use real money in Second Life, well, not really, you use Linden Dollars. Linden Dollars can be bought with real money and sold for real money, but the exchange rate is really good hence turning it into virtual money. There are other ways to get Linden Dollars than buying them though.
Linden Dollars are the currency of Second Life. In Second Life you do all your buying with Linden Dollars. You'll first either have to exchange real dollars for Linden Dollars or make money in Second Life before you can buy things though. Once you have them, you can start living it up in Second Life.
As I mentioned, buying money is certainly the easiest way to get money for your Second Life adventures. You can buy Second Life money from directly from Second Life using the Lindex. This is probably the simplest way. Buy approximately L$1245 using $5.00 or your real money. There are also ATM's located throughout Second Life if you ever find yourself short on cash.
If you like playing the stock market, or you like to buy and sell things, here's your chance to make some virtual money buying and selling Linden Dollars. Buy low, sell high, maybe you'll make enough to buy a virtual house, or more. Watch out though, there are fees involved in each transaction.
While we're on the subject of buying and selling, you can buy and sell anything in Second Life. There are also tons of free things you can find on Second Life that you can resell to make some extra vcash. Buy and sell houses, cars, clothes, jewelry, just about anything.
Getting a Job
Of course, when we think about making money, we usually think about getting a job. In Second Life you can find jobs too. Make money helping other people do what they need done. Do things like be a shopkeeper and help people find things when they come to the shop looking to buy things. Try your hand at modeling, I hear it pays pretty well, I may even consider doing it. How about being a club dancer, stripper or escort. I hear they make really good money. There are lots of other jobs in Second Life to, you just have to find them. Find job listings in the Second Life forum, they're there for you to find. If you're good at scripting or find that you like building things in Second Life, you may make some real money making things for Second Life.
There are also some odd ways to earn free things and a little extra vmoney while you're in Second Life. There are these things called sitting chairs, or something to that effect, they're all different. Some of them have you earn vcash for as long as you sit there, others have you earning other things such as new skins, clothes or whatever. All you have to do is sit in them for the required amount of time to earn your prize.