Growing up I thought there was only one way to make money, get a job and over time as I gained more experience, I would make more money and one day wake up and be rich. Unfortunately, as I got older and more exposed to the real world, I realized that’s not always the case. In the real world, there are many expenses and bills you have to pay for and it seems like everything costs money. When you’re looking at your budget after you’ve paid taxes, bills, and a little discretionary spending, you realize there’s not much left to save and it will take forever for you to reach your money goals to retire. But as I got older, I was fortunate to learn something, you can make money outside of your job! That's when I found out about people having multiple income streams and how it can make you wealthy not just rich! There's a difference between being rich and wealthy. The wealthy don’t work for money, they have their money work for them. Wealthy people know how to create money and even if they quit their job, a wealthy person still has money coming in. Once I discovered this, I made it my goal to have as many income streams as possible. The average millionaire has at least 7 different income streams! In this post, I will discuss why it's necessary to have more than one income stream and some of the different income streams you can have!
Why It’s Necessary
I’m sure a lot of us can remember the market crash in 2008 where we entered a recession and many people were laid off and lost their jobs. By putting all your eggs into one basket, relying on your job for all your money needs can be risky because of the uncertainty that can come with a so-called stable job. Currently, the US is facing its longest government shutdown in history. Over 800,000 federal workers are without a paycheck and many are feeling the stress of not being paid. It is very unfortunate that many people don’t have the money to pay bills, buy food, and provide for their family and I hope that this problem is solved soon. However, I think this is also the symptom of a bigger problem, people don’t have enough savings or other income sources to support them in the instance of job loss.
According to CNN Money 40% of Americans can't even cover a $400 dollar emergency expense. You hear many financial experts recommend having 3-6 months of expenses saved up in the case of job loss or an emergency. We can't control the government and what they do or the economy, but what we can control is our own personal financial situation. Say for example you are one of the people who have an emergency fund and you are a federal worker, you may be out of work for a while but you know you will still be able to pay your rent, make your car payment, and put food on the table while you wait it out. While you might cut back your spending during this time and not live like you did when you had a paycheck coming in every week, at least you will be able to make your basic needs. I understand it may be hard to save up 3-6 months of expenses, but you don’t have to do it all at one time! Just start out a little at a time and over time it will grow. Obviously, you hope to not have to touch that money, but we all know that life happens and it’s better to be prepared and have a plan in place than have to figure out what to do when it’s happening to you.
Now you might say again, Rod I can’t save that much money up because my bills are too high, and I have to take care of other people, so I have to live paycheck to paycheck. Okay, well here’s another option, start a side hustle, side business, or other income generated job outside of your regular day job to cover your basic expense. It has never been easier to start a side business because of the power of the Internet, technology, and information. Startup costs are also pretty low and your ceiling to make money is only limited to how much value you bring and how creative you are. You may say I don't have the time or that you're too busy, but we all have the same 24 hours in a day. People aren't just handing out money, you have to sacrifice and work for it. That may mean waking up earlier and working on your side project after you get home instead of watching TV. Maybe you also work half days on Saturday's and Sundays on your side project. For me, my side projects are this blog and my book club. Starting my blog took the whole summer to develop. It also takes about 2 hours a day on a weekly basis to research, make the post, edit it, make the email send out, and promote it. I enjoy doing it and I wouldn't do it every day if I didn’t, but it still takes time.
Whichever way you want to do it, it will require work especially in the beginning, but once you get going and start making money, it will be worth it! I’m sure most people have things that they are passionate about outside of their job and in today’s climate, there’s no reason why you shouldn’t be able to pursue them. If you have multiple streams of income that can at least cover your basic expenses, then you aren’t as worried about trying something you are passionate about even if it doesn’t make you a lot of money.
Depending on the business or side hustle you start, this can turn into passive income which is income that comes in without you having to do much work. That being says it does require a lot of work in the beginning in the form of time, money, and effort. It also may require maintenance, upkeep, and work although not the large amounts needed to get it there. I think that’s why it’s more passive in a sense because instead of spending 40 hours a week on it to get it going, you might only spend 4.
But who wants to live in fear and have the only reason you build other income streams is in case you lose your job? That’s not a mindset I want to have. The mindset I want to have is that I’m building multiple income streams because I want to expedite my long-term wealth building process! People often call this the Income Snowball. Essentially when you have multiple income streams, it's like a snowball rolling down a hill and as it picks up momentum it starts to collect more snow (income) and your snowball gets larger. The more income streams you have, the faster your snowball and wealth building process will grow!
Different Income Streams You Can Have
According to Passive Income M.D. here are the 7 most common income streams.
As you can see there are many ways to make money! Just like you should diversify your stock portfolio investments, you should also diversify your income streams. We all have individual characteristics and abilities that we can all leverage for different things and we should use those skills to make money outside of the regular job you have. Not only will you be able to provide more of a safety net for yourself, but you will also expedite your wealth building process. If you were ever on the fence about finally going for the side project you always wanted to do, I hope after reading this it encouraged you to at least give it a try and see what comes from it! If you liked this article, please leave a comment below!