My Mother (bless her heart) gave me the truest advice I've ever gotten: "In this country (America, in my case) you can be anything you want to be, as long as you have a job, too."
How do you make money in folk music? Anyone who saw "A Mighty Wind" should know that one answer to this question is to go into personal management. It's the promoters that make the money, not the talent. Promoters are the only people who create "jobs" in music.
There are folk-related jobs; you can teach people to sing or play, but I have always considered this is more a job in education than music. Success as a teacher will depend more on your teaching skills than your playing skills.
There are jobs in pop music, some that are also folk-related. You can help bar owners sell drinks or coffeehouse owners sell coffee by playing songs that people want to hear in rooms where they can consume these things. What you will find, though, in most cases, is that the "folk" songs that people want to hear are the ones that at some point crossed the line and became pop tunes. You can also make money by writing and selling songs, but these songs will not be folk music (by definition, they are not songs from "the folk").
The fact is that some folk songs have become pop and some folk singers have had long, successful careers without becoming entirely pop. In my opinion, these have been happy accidents more than the result of job opportunities; the residue of great talent bumping headlong into rare opportunity.
To make money in folk music - just as in any field - you have to approach your music as "product", ie, just another vehicle for making money. Maybe you can do it without losing your integrity, or cheapening your music. I sure don't know how to do that. In my experience, you find yourself after x-number of years in some country bar at 4 in the morning with another set to do wondering "how the heck did I get here?"
Good luck, keep playing
Something good just might happen