Create Multiple Sources of Income – Starting Today

As I wrote about in a previous blog post, entitled Achieve Financial Independence, most people learn very little about money growing up. Although we attend school for at least 13 years in the United States, very little attention is devoted to teaching students the important skills they will need after they graduate from high school or college – including how to become financially independent.

One of the most important concepts I’ve learned about money is “multiple sources of income.” Creating and managing multiple sources of income is the key to long-term wealth accumulation, and it’s never too early or too late to get started.

Why is it important to have multiple sources of income? The first reason is probably obvious: to help you survive, and eventually thrive, financially. Most people are not thriving financially. It’s not easy to make ends meet on a single income, and most couples and families are not where they want to be financially even with two incomes. The more sources of income you have, the easier it will become to achieve your financial goals.

The second reason to have multiple sources of income is to diversify how your income is earned. If all your income is earned from your job, and you get laid-off from that job, then you lose your single source of income. If you have five sources of income, then losing any one of them would have less of an impact.

If you don’t have multiple sources of income helping you to achieve financial independence, then today might be a good day to start adding some. Hopefully, the information contained here will provide a few ideas to get started.

1. Examine your spending habits

One of the quickest ways you can “find” extra money is by looking at everything you spend money on, and figuring out how to spend less. There are a couple ways to do this: (1) Buying fewer things, and (2) Pay less for the things you currently spend money on.

The first part is self-explanatory. The reality is, most of us spend too much money on things we don’t need. Keep track of your spending for a month – every dollar you spend – and you’ll see what I mean. 

Second, one of the great philosophies around spending money is to buy wholesale. Most people buy retail – they pay high prices for things that can be bought less expensively. 

– Buy during sale seasons. Does your favorite store have an Anniversary Sale every year? If so, then time your purchases around that sale season.

– Shop your insurance policies (homeowners, auto, etc). This is a dynamic industry, and you can often achieve savings simply by moving from one company to another. Additionally, considering higher deductibles or changing other coverage features can result in additional savings.

Stop buying things you don’t need. Every dollar you don’t spend on something you don’t need and won’t use is a dollar you can invest in your financial future. 

2. Examine your investments

I could write an entire article – or maybe even a book – on each of these topics. This is intended to stimulate your thinking around each area, and I invite you to invest time researching each area more fully.

As for investments, what is your current investment situation? If you have no investments (or savings), then re-read the section about examining your spending, and you will uncover ways to free up money for investing.

In terms of basis investing, if your company has a 401(k) plan with a match, then you should at least contribute as much as you can to maximize your company’s match. For example, if your company matches 50 cents on the dollar up to five percent of your income, then make sure you’re deferring the full five percent. The match from your company is free money!

3. Decide which additional source(s) of income to add

If you Google “multiple sources of income” or “multiple streams of income”, then you will learn dozens of great ideas for creating additional sources of income. For now, I’ll ask you to consider two: a side hustle business (or businesses) and real estate.

Side-Hustle Business

One of the quickest ways to earn additional income is to develop a side-hustle business. This is a business you start part-time, utilizing a skill you possess, or an area of interest. This could be simply selling things you’ve accumulated through the years (and no longer want or need) on eBay, Facebook Marketplace, or by holding a garage sale. It could also take the form of crafts, art, or other creations that you sell by creating a shop on Etsy, for example. The cost of getting started on Etsy (or other similar sites) is low, and you can get everything set up quickly. Finally, if you have a marketable service, then you could offer your skills on sites such as Fiverr or Upwork.

I read recently about an amazing entrepreneur named Marla Aaron. Marla worked as Senior Vice-President of Communications at a unit of McCann Worldgroup, one of the leading advertising agencies in the world. Although she was very successful, Marla always envied her friends who went to art school. 

Marla had a passion for jewelry design, and a stirring inside her that eventually led her to leave her job, and start Marla Aaron Jewelry at her kitchen table. She brought in income as a freelance marketing consultant, while growing her jewelry business. Today, her business operates out of a showroom in New York.

What side hustle business stirs inside you? Opportunities exist for all kinds of services, and products can be sold around the world more easily than ever. Whether you want your dream business to replace your “9 to 5”, like Marla, or you simply want to create another stream of income, a side-hustle business is a great low-cost, low-risk way to get started.

Real Estate Investment

Shortly after my wife and I were married, I found our first real estate investment. It was a two-bedroom condo in a university town, located directly across the street from a hospital. I had been studying the merits of investment real estate, and I knew from the terms offered by the seller that this would be a good investment.

There was just one challenge: we were living in an apartment and hadn’t even bought our first house yet!

After convincing my bride that this was a sensible idea, we purchased that property, and went on to make a significant number of investments in rental real estate. Thankfully along the way, we even purchased a house to live in!

There are several key reasons you should consider investment real estate as one of your sources of income:

– Cash flow. One of the huge benefits of real estate investment is the ability to generate positive cash flow from rental income, after your mortgage payment and other expenses have been paid.

– Leverage. Since financing is available for real estate with a relatively small down payment, the investment’s potential return is increased significantly. That’s leverage.

– Appreciation. In most areas of the country, real estate values tend to increase over time. A good investment will therefore increase in value, resulting in a higher profit when you sell.

– Equity and wealth accumulation. The great thing about rental real estate is your tenant makes the payment, thereby reducing your mortgage. As your mortgage is paid down, the equity in your real estate investment increases. And so does your wealth. The increased equity provides capital to buy more properties, and thereby increase cash flow and wealth even more.

4. Take action

We’re living in a world of considerable uncertainty, and that includes employment and financial certainty. In spite of this, most people are still relying on just one source of income – their job or their business.

Multiple sources of income provide increased income, diversification, and peace of mind. Create a plan for incorporating additional income streams into your life, and get them in place one-by-one – starting today!