If you don’t diversify your income, it could lead to financial devastation. Think about what could happen if you lose your job. Yes, emergency funds can help protect you in those circumstances. But your emergency fund will go further and you will have more financial security if you build income diversification into your finances.
How To Diversify Income
You don’t have to replace your primary income source completely, all at once or from any one source. The idea is to create a number of alternative sources and build on them – just in case. Here are some ways to do just that:
Part-time Job: Look for an additional job. This is a low-risk way to really boost your finances. It may not add a lot to the bottom line at first, but over time this can really help. My wife went back to work part-time several years ago. As a result, she brings home some nice coinage, plus she provides health care benefits for free that I used to pay for. Score!
Spouse Going To Work: This is going to vary from family to family but I think it’s a topic worth discussion. I mentioned above that my wife went back to work not because she had to, but it was a great way to reduce the pressure on me. The financial benefits were fantastic because they enabled us to put a lot more towards savings. And more important, this was really empowering for her. Money aside, it was just really good for our relationship. This may not be the case for everyone but it was helpful to us.
Again, there are pros and cons to this move but I absolutely think it’s important enough to warrant a conversation.
Side Hustle: If you want a little more flexibility in your work schedule, you can start a really small business. And most of these cost very little (or nothing) to start. Consider pet care, tutoring, house cleaning, yard work, hauling services and other odd jobs that match with your skills and abilities. That way, if something happens to your main source of income, you will already have a client base you can rely on. To be frank, I like this idea far more than taking on a part-time job. It provides more freedom and opportunity.
Income Investing: For those who have the resources, time and patience to build up an alternative revenue stream, income investing can be a good choice. You can create a portfolio of investments that provide regular payments to you. You can create income from a retirement asset allocation even if you’re still working. This takes time to build up, but with enough planning you can receive a decent revenue stream that can help in times of financial difficulty.
Make Money Online: Like income investing, this can take time to get working. However, by devoting some time to build up a website or blog (and monetize it), sell freelance services or become involved in affiliate selling (or even sell your own items online), you can create an alternative revenue stream. If you’re serious about making money online, be sure to read “How I Make Money with My Blog.”
Diversifying your income can catapult you forward in achieving your financial goals. It can provide more freedom, excitement and empowerment. When you diversify your income you also gain a much greater sense of security at the same time. No matter how secure you feel at the moment, I suggest you consider how to diversify your income now before problems come up.
How are you diversifying your income? What impact is it having?