Why You Need Multiple Streams of Income

A friend of mine wrote a post today asking if the 9-to-5 job was dead. I’m not sure if the regular day-to-day working job is dead, but one thing is for sure – the work environment of today is changing.

Years ago we got wise to the concept of multiple streams of income. We spent some time thinking about how interesting it was and about how we like for our family to gain some other income sources one day. At the time, he had a job in the manufacturing industry and I was a full-time stay at home mom. We were blissfully floating along in our financial ignorance, trusting that employers had the same faithfulness to their employees as Rick had to his employer. Rick is an awesome worker. He’s smart, inventive, never calls in sick, etc., etc.

But I’ll never forget the day when the idea of multiple streams of income became more than just a “good idea”. In February of 2010, Rick called me from work to tell me that he was being laid off. Financially, we were not at all prepared for a job loss. Luckily, they gave him a six-week notice and a three month severance. We did fine financially throughout that whole thing, but it woke us up to the reality that by only having one stream of income, we were ridiculously vulnerable. Add that to the fact that we had no savings at the time, and you realize real quick that our financial situation was a disaster waiting to happen.

Why You Need Multiple Streams of Income

A while after the layoff happened, we started looking more seriously into this “multiple streams of income” thing. We now are more than a one-income family, and if (God forbid 😉 ) there was another job layoff here, we would have other sources of income to help us make it through. Friends, we are in some different times here in America. Right now, the media is raving about how wonderful the economy is, but we’re still looking at an 18 trillion dollar national debt and an 11 trillion dollar consumer debt load here. Those are some traumatizingly big numbers, my friends.

Many families (over 25 million) these days are still living paycheck to paycheck. Times that times four (assuming the average family is roughly 4 people) and we’ve got a full one-third of American families that would be devastated financially by a job loss. This is where multiple streams of income can save a family financially. If there were 1 or 2 extra sources of income when a job loss hit, it might still cause some bruises on a family’s income, but if there were a few other income sources to help make ends meet, at least they could put some food on the table, and if they were willing to implement a bare bones budget, those multiple income sources might even help a family make it through until another job is found.

I’m a firm believer in having multiple streams of income for the sole reason that no one job can be depended on in this day and age. Even if a job layoff isn’t possible in your field, there is the possibility that some other event could force you out of work, be it a back injury or whatever.

Multiple Streams of Income: Ideas for You

So what are some ideas for adding some extra income streams to your life? If you’re truly considering adding some extra income, try these ideas on for size:

  • Real Estate Investing
  • Dividend-paying stocks
  • Finding a side biz that you can do. What are your gifts and talents? Use them to start a side business.
  • Freelancing or contract work in your field of expertise
  • Getting a second job that fits in with your schedule
  • Being “on call” for a friend who’s a biz owner

There’s no shortage of ideas, really. Here’s how you can determine what streams of income are best for you:

  1. Determine how much money you have to invest in starting up another income stream
  2. Make a list of your abilities and talents
  3. Search the Net for ways to make extra cash
  4. Make a list of potential side income streams that fit your means and your lifestyle
  5. Narrow the list down to the 3 or 4 most realistic side income opportunities for you
  6. Get to work making one work!

Today my husband and I are comforted by the fact that we do have other sources of income should his main job go by the wayside again. Do yourself a favor by putting yourself in a position where you have some other income streams besides your main job – you’ll be glad you did.

29 comments on “Why You Need Multiple Streams of Income

  1. Very timely post for me to read Laurie 🙂 I definitely, I definitely want extra streams of income, particularly with freelance writing. I want to be able to have a healthy savings account and not worry when an unforeseen expense comes up!

  2. I think one thing that’s tough for me is realizing that since I’ve moved to Raleigh, a lot of my, “I could scale this if I wanted to” connections are gone. I don’t really help people with automating the spreadsheets, or babysitting or tutoring anymore, and it’s not just because I don’t have time.

    This is one reason for my desired foray into freelance writing (although the stronger is to build an income to leave my full time job).

  3. With Mrs. SSC’s company going through layoffs, we’ll find out in September whether she stays on or not, we’ve paid more attention to potential sources of multiple income. We realize we’ll be fine on my income, and if we’re both laid off (not uncommon in the oil industry) we’d still be fine for a good year or so. We have a big cushion of investments called our FFLC fund, so instead of retiring early, we’d dip into that. That’s currently not sustainable for now until we can tap our 401k’s so eventually one of us would have to work again.
    If she does get laid off though, we both agree it could be a nice break from the dual income work lifestyle. Her getting to be a SAHM for a bit would be good for everyone involved. It could force some of those income streams to get developed sooner than later though.

  4. You’re so right that this is necessary these days, Laurie. My husband was laid off from his professional job when our daughter was 2 months old and I was at home full-time. We were fortunate in that he found a new job 10 days later, but those were the most stressful 10 days of our marriage. We were new parents and new homeowners, and we had overextended ourselves by not appreciating all of the costs of home ownership. His new job paid less, and that’s when we started accumulating credit card debt.

    1. I can identify, Amy! Yes, it’s very important. Don’t want to be left in the dust if the family’s major income goes away. So glad your hubby found a job right away too. That must’ve been a huge relief!

  5. I’ve always thought the earlier you diversify your income, the better. When you’re younger, a second job or side business isn’t as big of a hassle. You have more energy, maybe you don’t have a lot of kids yet.

    For me, now, the idea of a second gig is exhausting just to think about, let alone actually do. 🙂

    We do have some income diversification, but it comes by very hands-off, outsourced methods (rental properties with property managers). We’re sacrificing some returns in exchange for our time and sanity. 🙂

    1. I think those sacrificed returns are worth it, DB40. I’ve got friends who own two rental props that are managed by management company. It helps save money in a number of ways. Real estate investing is one area we hope to dip our toes in one day too.

  6. I couldn’t agree more, the more you rely on one income stream the more you put yourself at risk. At the Even Steven Money household we have our 9-5 and real estate, but are looking to add more as time goes on.

  7. It’s so interesting to me how multiple income streams have really started to resonate with people. It wasn’t that long ago when people who had to work more than one job, were seen as struggling. Now we realize it’s smart and provides peace of mind and flexibility.

  8. I remember when I started my own company, my attorney told me that he thought it was a great idea because instead of having one boss (i.e. your employer) you will have 100s of bosses (i.e. your clients) so you won’t expose yourself to as much employment risk. I never thought about it at the time, but two years later, I definitely see the importance, and I love that I have diversified income streams. It certainly helps me sleep better at night. 🙂

  9. This is definitely something that I can relate to. My husband and I are starting to think down the road to when we start a family. He’s a ranch-hand and doesn’t have time to have more than one job. I have 3 jobs and I’ve been thinking about what to do when I want to be a stay-at-home-mom, when we’ll have 1 income. Thanks for getting my brain gears turning.

  10. Multiple income streams does offer a great cushion if unforeseen circumstances arise. I would argue that having a hefty financial cushion is also an option, although perhaps not as sustainable as multiple income streams.

  11. A very timely post indeed! I’m working on establishing a part-time side hustle for myself. Since I moved to NJ, finances have been tight, and getting additional work is a no-brainer way to reduce the stress!

  12. Side hustling opens up such freedom in life. I can’t believe how blogging has changed my own course. Yes, it’s additional stress, but that should be part of the brainstorming – figuring out what you can reasonably do with the time you have available.

  13. We’re headed this way. I’m just now braving the world of freelance writing. And hubby has become The Guy you go to at his job to get your guitar fixed. He earned enough to replace his smart phone after the battery went bad, recently. I definitely want to head toward the “multiple income stream” direction.

  14. We’ve taken a bit of a different approach to insulating ourselves against job loss. Although I think multiple income streams are an excellent idea (and something that we’re working on), we’ve also factored this idea into one of the reasons why we’re working to pay off our debt (our mortgage) at light speed. We figure that when we own our home free and clear, and have no debt, one of us can work at McDonalds and we’ll still be able to make ends meet.

  15. I agree that the 9-5 job hasn’t died but there definitely has been a shift in the work environment. Nevertheless, I think it always pays to have multiple streams of income. Even better when those streams are somewhat passive. Or at least in the case of freelancing, it gives you flexibility. You don’t want to rely on just one stream in this economy when most jobs aren’t that stable.

  16. We are definitely in that ‘high risk’ boat, relying on only my income. The problem I find is that it’s just so high compared to any alternatives that I’ve always found it hard to justify the opportunity cost.

    But I’ve now come around to the idea and am working hard to rely less on my salary one way or another, either with some ‘side hustlin’ or doing some freelance work instead of my salaried job, to give me some more flexibility and time to work on creating even more diversity.

  17. When you work for someone else your job is never guaranteed. That’s the biggest thing you need to understand. I was employed one day and unemployed the next. It’s up to the individual to have a back up plan or plans. Multiple income streams, passive income streams insulates you from the eggs in one basket situation.

  18. I’ve really found that multiple income streams give you peace of mind. I will say that we are still far from being sufficient if I were to walk away from my 9-5. The goal is to have so many diverse sources of income that losing any one of them would not derail our long-term goals.

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