A general dream for many of us is to go to college, get a good job, get married, raise a family, and live happily ever after. Of course, I realize this may not be the dream of everyone. But what happens when the plan that you have in your mind changes due to unforeseen circumstances?
You get laid off from your job, have a health issue that prevents you from working, or reach a point where you feel you have a dead end on your career growth. Any of these situations can be detrimental to your finances. If any of these scenarios resonants with you, this article will review why you should have multiple streams of income.
My goal is not to persuade you to change your current job or what you are currently doing. Instead, the goal is to provide a forward-thinking view of the future and how to prepare for it.
We will review the following ideas to help you develop a strategy to create multiple income streams.
- Economic factors that can affect you
- Generating income streams to protect you
- Focusing on one thing at a time
- Using extra income to increase investment opportunities
- Scaling and growing your income over time
Economic factors that can affect you
Inflation, a potential recession, higher interest rates, student loan debt, and future uncertainties can impact any of us at any given time.
For these reasons, the future of preparing for retirement and even survival may look different than past generations. Our ability to navigate an unpredictable economic environment will require a different approach to producing income for ourselves.
There is an agreement on one side of the spectrum that says you should diversify your income streams by not placing all your eggs in one basket.
The other side of the spectrum emphasizes focusing on one income stream, such as your regular day job, and building an income stream based on advancement or promotions.
Both arguments have valid solid points, but what happens when you lose your primary source of income due to an unplanned event?
Let’s look at the importance of creating more than one source of income.
Generating Income Streams to Protect you
One of the advantages of having additional income streams is protection. Having another source of money coming in can give you a buffer just in case your primary income is taken away or decreased.
The question to ask yourself is, what am I willing to do to protect myself because I may not be able to control what happens in the future?
One option is to do nothing and face what happens later if you experience a downturn in your finances or income.
However, the alternative is to take action and actively prepare yourself ahead of time. For example, please look at how ants, as tiny as they are, spend all summer storing food. Why do they do this?
The reason ants store food in the summer is to have food in the winter when they can not get out in the colder weather to find food.
Think of the summer as the productive years when you are younger, energetic, and able to do more. In contrast, the winter is when we may have slowed down due to aging, a medical issue, or some unexpected life-changing event that limits our ability to work or make extra income.
Developing income streams allows you to protect yourself in case you need it later. In addition, it can provide you with stability and flexibility.
Focusing on one thing at a time
We all have 24 hours a day and can only do so much. So when developing income streams, do not spread yourself thin by trying too much all at once.
While reviewing a discussion of successful millionaires, a question was raised on how a person should build other income streams. The answer was to focus on one thing at a time.
To take this a step further, observe how professional athletes operate. During their playing careers, they may focus heavily on crafting their skills to be players in their position or sport.
However, some athletes start looking ahead to when they will have to retire or leave the sport. Looking ahead, these athletes may take on the role of sports analysts, a job as a coach, or some other career path that helps them produce income as they get older.
Yet, other athletes may invest in real estate, start a business franchise, or produce alternative income sources.
Just like this example, we also can think of preparing for the future by adding additional income streams and developing them over time. Once you master it, you can branch out to add other income streams.
Using extra income to increase investment opportunities
The benefit of having additional income streams is that they allow you to invest in other things, such as stocks, real estate, businesses, and other ventures that can work for you as passive income.
Aside from that, it can provide you an avenue to pay off debt faster, build an emergency fund and save money to pay for future expenses like buying a house, a car, or something important.
Leveraging your income opportunities to work for you gives you a chance to have the freedom to do things that are more meaningful and helpful to yourself and others too.
Scaling and growing your income over time
In the investment world, we use terminology such as compounding interest to illustrate how money grows over time. This is based on the idea that if you invest regularly and use a well-diversified investment strategy, your money can grow over time. This is not guaranteed because, as with all investments, risk is involved.
The point here is that time spent saving and investing can potentially pay off over a long period.
Likewise, building other income streams for yourself through other means, such as side hustles, online businesses, or even service-related businesses, can provide a pathway to develop and scale your income over time.
This does not happen magically overnight. Instead, it requires time, action, sacrifice, dedication, and hard work.
As we wrap things up, this article’s focus was to highlight why you should have multiple streams of income. We outlined how economic factors can affect you, the importance of generating income streams to protect yourself, focusing on one thing at a time to build income streams, using the extra income to increase investment opportunities, and scaling your income growth over time.
The future of life is uncertain; no one knows what is ahead. Therefore, how we prepare for the future in terms of saving, building income, and providing protection for ourselves is up to each individual.
The question to ask yourself is, what is important to you? Do you want to stay where you are and do nothing, or do you plan to take action to prepare for your future? Please share your thoughts, comments, and ideas.
Thank you for time in reviewing this article.