The conventional career path has historically, in the United States, gone something like this: you pick a job, advance in that job, draw a higher and higher salary, and eventually retire, preferably with a pension plan. Millions of Americans follow that path today, relying on a single source of income, but in today’s economy, that approach is inherently flawed. If you follow it strictly, it could set you up for hard financial times, longer stretches of work before retirement, and in some cases, total financial failure.
Why Multiple Income Sources Are Important
Another source of income will, invariably, increase the total amount of money you have coming in. But a raw increase in income isn’t the only goal. Having multiple streams of income will help you see the following benefits:
1. Protection against market fluctuations. First, you’ll protect yourself against fluctuations in the market, whether those fluctuations occur specifically in your industry, or across the country. For example, if you work for a company with sharply falling demand, you might lose your job unexpectedly—or if the economy takes a hit the way it did back in 2008, everyone’s job might be a little less secure. If you lose your job or suffer a pay decrease, you’ll have another source of income to back you up.
2. Faster paths to wealth. Having more sources of income also gives you faster and more agile paths to wealth. Each new source will increase the total amount of money you make, and represent another path of potential advancement; for example, if you aren’t seeing steady rates of increase in one area, you’ll likely see them in another. This makes it more likely that you’ll hit your financial goals eventually.
3. More flexibility for the future. Having multiple sources of income also gives you more flexibility for the future. If you decide you no longer enjoy your main career, you may have the option to devote your full-time hours to another gig you’ve had as a backup. Alternatively, you’ll see more ups and downs in more industries and areas, so you can jump on thriving opportunities whenever they arise for your different areas of expertise.
How to Add Extra Income to Your Life
The biggest factor preventing professionals from adding extra streams of income to their life is the misconception that to earn an extra line of income, you need to devote an extra full-time job’s worth of time and energy to a different profession. That’s simply not true. In fact, many extra sources of income can be capitalized on with a few hours of research and a bit of money, and others take just a few extra hours a week.
These are just some of the most popular “simple” options:
- Stock investing. Many people are reluctant to enter the stock market because they’re afraid of losing the money they invest. However, it doesn’t take much research or experience to make wise investment choices; investing in index funds, or blue-chip stocks (i.e., big companies with a long history of success) for the long-term has little to no risk, so long as you don’t panic sell when prices start falling. Day trading is another option, but takes significantly more research.
- Real estate investing. You could also invest in real estate—especially rental properties. If you charge more in rent than you pay on your monthly mortgage payments, you’ll make a clean profit. On top of that, you’ll likely make a profit when you sell the property—assuming prices in the area have risen.
- Sharing apps. “Sharing” apps, like Uber or Airbnb, allow you to share something of value that you already have—such as your car or your home—with others for a bit of money. Your profit margins won’t be high doing this, but you’ll be relying on a stable, proven architecture, so you could easily make a reliable stream of income doing it.
- Extra work. If you have any skills that you can use as side gigs, there will likely be people willing to pay you to do them. For example, you could paint houses, mow lawns, do electrical work, or even consult.
- Crafting. You could also create things and sell them online, as there are countless marketplaces that allow you to sell for only a fraction of what you eventually make.
If you’re currently drawing money from only one source, it’s time to diversify your earnings. If you have a tight schedule, and/or a limited amount of capital, you might be restricted in which sources you can pursue, but there are options available for everybody. Do some research, find something you might enjoy, and start complementing your main salary—before you regret missing out.