How many streams of income do you have? This is what we should ask when meeting someone new rather than the old “What do you do for a living?”. Sure it’s a bold thing to ask, but inquiring minds want to know. With job security steadily decreasing, having multiple streams of income is the best solution.
Most of us have different streams of income and don’t even realize it. For instance, if you have a spouse and both of you earn a paycheck from different sources, that counts as multiple streams of income!
Overwhelmed at the thought of having multiple sources of income? Here’s why you need to start creating multiple streams of income as well as legitimate residual income ideas that will help you make more money.
Multiple Streams of Income Breeds More Security
An obvious benefit of having multiple streams of income is being able to make extra money. You can always ask for a raise or switch jobs or even careers to earn more, but that doesn’t guarantee a significant pay bump.
Plus, what happens if you lose that job? Your entire salary is gone altogether. Having multiple sources of income allows you to diversify so if you lose one source of income, the others continue to provide.
As a freelancer, I’m able to make my income more secure by working with multiple clients. With various income sources, I feel like I have more job security than someone who has just one employer.
When I worked a 9-5 job, I freelanced on the side. That enabled me to increase my income by over $1,000 per month in a short amount of time. Had I relied only on the income from my main job, I wouldn’t have received that type of pay raise for several years.
Pay Down Debt Faster
With an increased income thanks to multiple streams of income, you can pay off debt faster.
Paying just the minimum on your debt sucks. It takes forever and you end up paying a ton of interest. To save yourself some time and money, you need to make extra payments beyond the minimum amount each month.
To do this, you have to cut expenses and earn more. Once you’ve reduced your budget as low as possible, it’s time to start earning more money. Getting a side hustle (or a few) can provide you with the extra funds you need to become debt free quicker.
A good strategy is to use your main source of income to cover your basic expenses while you direct all your income from other sources toward debt.
Save More and Start Building Wealth
Just as having multiple income streams can help you pay off more debt faster, it can also help you save more money.
The same principles discussed in the previous section can be used to boost your savings account instead.
A common financial issue I’ve noticed is people struggling to save enough money, whether for emergencies or retirement.
Saving for retirement is crucial and having multiple streams of income could give you that boost to start maxing out your 401(k) or IRA.
Having additional income streams can also help you pay for large purchases like furniture, vacations, rental property or even a wedding in cash and avoid accumulating more debt.
Start Building Passive Income
I’m definitely not recommending you get three part-time jobs just to say you have multiple streams of income. That sounds exhausting, and I know because I worked two jobs in college as a single mom.
Aside from my full-time course load, I worked at a grocery store as a product demonstrator then got a second job at a restaurant.
*Related: Looking for other real estate investment options? Read our guide on how to start investing in real estate with little money for the best available choices.*
Since my jobs were across the street from each other, I often found myself working a double shift. I would get to the grocery store at about 9:00 or 10:00 a.m. and work until 4:30 p.m. Then I’d run across the street and clock in at the restaurant to work 5:00 p.m. to close.
It was a draining schedule and didn’t make me any richer. I earned enough to get by and quit after about nine months when I couldn’t take it anymore.
To avoid getting yourself into a similar situation, I recommend establishing some flexible and passive additional income streams. They do take work in the beginning but they can be a great way to increase your net worth.
Start Adopting Millionaire Qualities
Finally, you should consider having multiple streams of income if only for the reason of thinking and behaving more like a millionaire.
The average millionaire has seven streams of income. If they’re not keeping all their eggs in one basket, why should you? Having multiple income streams will not automatically make you a millionaire but it will provide you with more options and financial security.
From there, you can take the necessary steps to build wealth. Multiple streams of income make it more than just a possibility.
Three Simple Ways to Create Multiple Income Streams
Interested in getting started? Here are a few of the best passive income streams you can use to diversify your income:
Invest in dividend paying stocks: Many dividend paying stocks pay out on a quarterly basis. This is great for those in retirement or those simply wanting to create an additional stream of income. Betterment is a great option for this. The robo-advisor manages your investments for you, with no minimum balance requirement.
Invest in real estate: Thanks to crowdfunding, you can now invest in real estate for as little as $500 with Fundrise. Using Fundrise, you can invest in either residential or commercial real estate and not have to deal with the work typically associated with managing real estate investments.
Roofstock is another good choice to invest in real estate. The platform focuses on turnkey properties to rent. No minimum balance is required to invest with Roofstock, though you must have 20 percent to put down and can invest within an IRA.
Read our Roofstock review to learn more about the platform.
Finally, Streitwise is a good real estate platform to consider. The platform allows non-accredited investors and has a minimum balance requirement of at least $1,000. The platform focuses on retail and commercial real estate investment opportunities.
You can learn more about real estate investing sites in our guide on the best real estate crowdfunding platforms.
Rent out a room or a house: This is the other side of real estate investing. Do you have a spare room or a second house? You can rent it through Airbnb and make additional income from your property.
These are just a few of the ways you can create multiple streams of income. With a little creativity, there are many other ways to create different sources of income.
What are some other important reasons to have multiple streams of income? Are there financial goals you have that multiple sources of income could help you achieve? What other ways are you working to grow your wealth?