If you read financial articles on a regular basis, you might be familiar with the concept of having multiple streams of income, or side-hustles. It has been a hot topic among bloggers lately.
However, this concept is not a new invention. For ages, wealthy people have been using and perfecting this strategy of income diversification to maintain elite financial status and grow wealth.
For example, a millionaire might have money coming in from:
- Earned Income – money earned for doing your job (your salary).
- Interest Income – money made from lending to others
- Capital Gain – a payment from an increase in capital assets (investments, real estate)
- Rental Income – income from renting out property (residential or commercial)
- Dividend Income – the portion of profits paid out to you from a company to you, as a shareholder
Related article: How Middle Class Rise to Make 70% of Forbes 400 Richest List
Today — more than ever — it’s imperative that the rest of us adopt this financial strategy of income diversification, get acquainted with it, and perfect it to usher in our own financial success.
Why You Need Multiple Streams of Income
Multiple sources of income gives you more control over your finances.
For instance, if I get fired from my job today, that income stops. If that job is my only source of income, I’d be forced to either dip into my emergency account or let the bills pile up while I search for another job.
You can imagine how bad the latter can turn out. For starters, it puts a strain on you as the breadwinner, and forces you to put your goals on hold.
I mean, if you don’t have an income, you really can’t save, invest, or do any of the things that’ll bring you closer to financial independence. Not to mention, you need to provide for your basic needs, like food and shelter.
You might have to hold out on certain bills because you have to be selective about what gets taken care of.
Worse yet, you might be forced to put your expenses on credit card, which will put you in a deeper hole. And depending on how quickly you find a job, your credit could be tainted because you had hold out on certain bills, further robbing you of your buying power and limiting your ability to invest.
Even after getting a job, you’ll have to retract and play catch up with unpaid bills, debt, refilling your emergency account, etc. The list could go on and on.
Diversifying your income is no longer a luxury reserved for the wealthy, it’s a necessary financial strategy for the working class.
Still not convinced about the importance of diversifying your income? Here are four ways multiple streams of income can help you enjoy life in the midst of an economic swing and propel you toward accomplishing your goals:
#1. Diversifying your income gives you options
More than anything else, having multiple streams of income gives you options. By acting as a cushion, it allows you to be more aggressive in finding better opportunities to achieve your goals faster.
#2. Having multiple streams of income establishes risk mitigation for your income
This is perhaps the most overlooked benefit of diversifying your income. Even if it’s a little side-hustle generating a few hundred bucks a month, it will provide some risk mitigation for your inflow.
Having more than one income protects you from setbacks on your journey and having to settle with a job you don’t want.
#3. Diversifying your inflow enables you to expand your skill sets
Let’s face it, millennials are one of the most educated generations to walk the earth. Many are under-paid and over-qualified for their positions. This makes competition fierce.
To give you an edge, you have to diversify your skill sets. Relying on one skill minimizes your earning potential. Testing different avenues to diversify your income allows you to learn new skills and sharpen them to make you a contender for many positions.
4. Having diverse income streams can expedite your journey to wealth and financial freedom
In author Thomas C. Corley’s five-year study of self-made millionaires, he found that many of them develop multiple streams of income: 65% had three streams, 45% had four streams, and 29% had five or more streams.
– Business Insiders
We live in a time of uncertainty. With an economy that fluctuates like the emotional state of a five-year old, you can’t count on your job passed this year, let alone retirement.
To create wealth, you need a consistent flow of income. A single paycheck from a job is not sufficient for providing stability longterm. There are too many variables to guarantee a consistent inflow. You may not have that job tomorrow.
“The masses almost guarantee themselves a life of financial mediocrity by staying in a job with a modest salary and yearly pay raises.”
-Steve Siebold, author of “How Rich People Think”
The fact is, a day job is designed to enslave you for 40+ years without guaranteeing financial security. However, many of us can’t afford that.
Personally, destiny is calling and purpose is ringing in my ears. My soul is crying “dissatisfied.”
Diversify your income. Leverage its benefits to create a life of freedom–freedom to pursue your passion and purpose. Create the life you’re created to live.
How to practically position yourself to stream your income and diversify your inflow
Clearly, the advantage of having multiple streams of income are undeniable. But, how do you make it happen practically? Unfortunately, that question cannot be answered in a small section of an article.
However, there are two simple and practical actions you can take today to get you started on your journey to multiple streams of income.
1. Start with what you have.
If you can effectively manage the money you have now, you can position yourself for income diversification.
For instance, taking care of debt can position you for a side-hustle with minimal strain on your budget. It can enable you to invest in the stock market with a chance to collect on dividends, or save up for future alternative investment opportunities.
Don’t forget paying off those debts can strengthen your credit. A wealth-minded person will view that awesome credit report as buying power for investment rather than a license for consumption. How can you utilize your credit to add one more income stream?
Start thinking like the 70% of the Forbes wealthiest.
2. Invest in yourself.
“YOU are the greatest appreciating asset.” Mustard Seed Money
One of the most beneficial things you can do today to create a desirable future is to invest in yourself. I’m speaking financially, of course.
Studies show that colleges graduates make significantly more in a lifetime than a person without a degree. Why not take this same concept and invest in yourself to monetize your hobbies, passions, and unique skill set and generate income for yourself?
Focus on your…
Your mind is powerful. Your situation is only limited by your thought patterns. Start investing in your mind by getting in the minds of those who have risen above the rat race. Dive into the information that can take you where you want to be (books, articles, videos, etc.).
We all have God-given skills and talents, certain abilities that allow us to understand and do things with ease and excellence that others might find difficult.
What is yours?
Discover your skill set and find your key to a purposeful life. You see, your talent is where you can serve the world most effectively. It’s where you can make the most impact. And when combined with passion, it’s where you’ll be most satisfied.
Invest in that. Follow the people that are doing it and learn from them. See how you can improve your skill and monetize it. That’s what business is in it’s simplest form: it’s a service or product (your skill) that solves someone’s problem.
Related article: 41 Ways to Make Extra Money Without Compromising Your Integrity
You can’t afford to not multiply your income
It’s a new era.
Millennials can’t afford to take the same approach to financial management as their parents or grandparents. To do so is a mistake.
Gone are the days when you would work for a company for 50+ years, retire with a decent amount of money in pension, and supplement it with social security payouts.
The economy is too flaky to offer that kind of luxury, and pensions are the thing of the past (for millennials, anyway). Not to mention, the government is too debated to hand out benefits (though we’re still paying in).
Create streams of income, exit that hated job, pursue your purpose, and live the life you’re created to live. The life of freedom, generosity, and contentment. A life worth living.
How are you diversifying your income and how did you achieve multiple streams of income? Share your knowledge and let’s thrive as a community.
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