THE POWER OF MULTIPLE STREAMS OF INCOME
The economy takes wild swings beyond anyone’s control, and unfortunately for most people, their only source of income is from their day job. When that reliable 9-5 disappears, they find themselves in serious financial trouble.
You may not believe this, but during this season we are in we have a huge opportunity to create additional streams of income, and here are the two main reasons:
1. The Internet. The web has created an unbelievable amount of opportunities and created a significant amount of wealth. All it takes is a little know-how, and all of a sudden, your ways to generate income are endless.
2. Resourcefulness. This generation more than any other has learned how to use their current resources to solve problems quickly and efficiently. They are not locked into one pathway and aren’t afraid to think outside of the box.
And now, more than ever, having multiple streams of income is bordering on necessity.
Here are 10 reasons why I believe everyone needs to develop as many income streams as possible:
1. Provides A Safety Net and Job Security
First, multiple streams of income provide a safety net for you. If you only work a 9-to-5, you are dependent on that income alone. So, what happens if you become ill? What do you do if you get laid off or fired? How will you bounce back from losing your job?
If you only relied on that one source of income, you may soon realize that you either:
1. Need to get a new job fast, or
2. You may get into debt while trying to get yourself afloat.
But if you have multiple streams of income, you can support yourself financially for at least a little while, and it gives you the opportunity to grow those avenues to earn even more money should you wish.
Putting all of your eggs in one basket is never a good thing, and the same goes for trusting your 9-to-5 to always be available to you. Multiple streams of income provide a safety net should you ever find yourself without a stable job or income.
It used to be that people would work at one job, climb the corporate ladder, and retire there. We all know that’s not the case today. With emerging technology, companies are being forced to pivot and what used to be considered “safe” companies are being forced to downsize or close altogether.
Just look at what Amazon is doing to the retail landscape. How many notable stores have you noticed announcing layoffs – Nordstrom, Best Buy, Macy’s. . . the list goes on and on.
When you’ve managed to acquire multiple streams of income, your “job security” isn’t tied to a single source. If the economy changes the revenue of one stream, you can rely on the others for a while.
Diversification is key.
2. Helps You Pay Down Debt
For some people, having multiple streams of income means more money that they can throw towards their debt. Not only can earning extra money mean you can save more but if you’re in debt, especially high figure debt, earning extra money means you can knock it out a lot faster!
Read More Here About: How to Use the Debt Reduction Snowball
Now, if you are creating another stream of income to pay off debt faster, keep in mind that you still have to report your extra earnings. So put some aside for savings and taxes, and then use the rest as you please! Paying off debt faster is easier when you’re earning more money through a side hustle or other income source.
Sadly, today’s millennials are graduating with more debt than any other generation. Student loan debt is reaching new heights, with USA Today reporting that the average bachelor’s degree creates $30,100 in debt. Add graduate school on top of that, don’t be surprised if your debt is in the six figures.
Of course, the more money you have coming in means you can pay down your loans faster. If you do have a lot of debt, paying it off is incredibly liberating. It’s also vital to your financial health.
3. Unique opportunities
With all the new opportunities that are being formed around you daily, why not follow your passions and dreams? What holds people back? Often, it’s that they feel tied to a job purely for financial reasons. They rely on that job to provide life’s necessities.
But if you have several incomes covering your basic expenses, you’re free to pursue your passions–even if they’re not particularly lucrative. This is one of the greatest benefits of having multiple income streams.
4. Allows You to Be Creative
Having multiple streams of income isn’t all about the money. In fact, sometimes people start a side hustle, small business, or freelance because it’s fun and a creative outlet! If your 9-to-5 pays well and isn’t terrible but isn’t fulfilling you and what you want out of your life, create a new stream of income!
You can find a creative outlet that:
· you enjoy,
· provides money from it to pay for the hobby itself, or
· puts a little extra in your pocket, and then you have something to do besides sitting at a desk all day.
5. Ability to stick to your values
More than any other generation in history, we are known for sticking to our morals and values.
Most of us don’t compromise our beliefs for anything.
So, when you work for a company or group who might require a compromise, where does that leave you? You either have to sacrifice your integrity or quit.
The ability to rely on yourself means that you live life by your own set of morals and values. This means less stress, and ultimately, greater satisfaction.
6. Allows You to Take More Risks
What would you do if you knew you weren’t worried about money?
· Would you take more vacations?
· Start a new passion-based business?
· Or maybe you’d invest in a few up and coming businesses.
Whatever the case may be, having multiple streams of income allows you to take more risks.
You’re less worried about paying your bills and debts, and that allows you to then focus on living your life to the fullest and taking advantage of whatever comes your way. And who doesn’t want to live life to the fullest?
The time to take some risks is when you’re younger. Investing, venturing into your own business, or changing careers. . . it gets much harder once you build obligations like a home and family. Failure always looms at the back of any entrepreneur’s mind, but when you’re younger, failure is less likely to have the repercussions that it might later in life.
Plus, the more mistakes you make, the more you’ll learn. Better to get that out of the way as soon as possible.
7. Potential Tax benefits
The new Tax Cuts and Jobs Act of 2017 actually benefit those who receive income from self-employment. Business income that passes through to an individual as a sole proprietorship from a pass-through entity (like an LLC or S-Corp) receives a 20% deduction.
This is subject to a maximum cap and you should review those details for further info.
8. Pensions are a thing of the past
Gone are the days where you could work 20-25 years at a company, and they would take care of you until you die. Now, you need a retirement plan.
Employer contributions to your retirement fund are great but having multiple income streams will help immensely–especially if you have the desire to retire at your own pace, rather than when your 401(k) dictates. Taking control of your future is a much more effective use of your time.
9. Social Security
In days past, once you hit a certain age, you could rely on Social Security to help pay the bills. But soon, this may not be the case. In fact, it’s entirely possible that Social Security will be depleted as early as 2035.
The financial safety net your grandparents collected will probably not be there when you hit retirement age.
This is all the more reason why having multiple streams of income is so important. Social Security may not last, but the work you put in now has the potential to carry you all the way through retirement.
10. Creates More Long-Term Wealth
It can be difficult to think long-term when you can barely plan for the next week. But the fact is, the work you put in now can have enormous long-term effects. Having multiple income streams can help you build long-term wealth without having to work harder.
You can work smarter and leverage your time to achieve financial freedom earlier. And having freedom from the drudgery of trading your time for money means that you can focus on what’s really important to you–both now and in the future.
Not only can multiple streams of income provide a safety net for you, but they can also create more financial security for you.
If your day job pays for your bills, you can then use your other income to save, invest, and more. You’re able to make decisions that affect your now and your future. Plus, when you save your extra income, you’re able to build a nest egg just in case anything were to happen. Wouldn’t it feel good to have an extra $10,000 in the bank just in case you need it?
Final Thoughts
Millionaires, on average, have seven streams of income. They’ve learned that diversification is the key to long-term wealth creation. This, in turn, is the key to achieving what many people dream to achieve: financial freedom.
Start as early as you can. Educate yourself and do the work. Achieving financial freedom is definitely possible, and if you can do it, you can live life on your own terms. When it comes to living on your own terms. . . the sooner the better.