It’s likely that you have one primary source of income — just like most people. It’s fine to have a single source of income. It can, however, be dangerous as well.
How would you cope if your primary source of income dried up, or your job was lost? That’s exactly what happened in the aftermath of the pandemic, many people lost their jobs and were furloughed.
The unemployment rate spiked in April after business closures and restrictions began in March 2020. By May, 23 million jobs were lost cumulatively. There hasn’t been a crisis as severe as this since the Great Depression. Suffice it to say, this created financial hardship for millions of people, which may explain why savings are dwindling and there’s record credit card debt.
This is why having multiple income streams is so important. By doing so, you won’t have to worry about losing one income stream if another one runs out.
Furthermore, Richard Corley, author of “Rich Habits: The Daily Success Habits of Wealthy Individuals”, analyzed IRS data and found that 75% of millionaires have multiple income streams.
And, that makes sense. It is easier to pay off debt, save for retirement, and build wealth when you have multiple income streams.
Creating multiple streams of income can be tricky, so let me tell you a few of the biggest mistakes people make. By avoiding these mistakes, you can generate multiple streams of income.
1. Master one revenue stream.
Perhaps the biggest mistake I see people make, myself included, before making multiple streams of income is this. You need to master at least one reliable form of income.
Maybe it’s your 9-to-5 job. And, that’s OK. In my case, it was when I became a financial planner that really taught me this. Five years into my career as a W-2 employee at the first investment firm I started with, I became an independent advisor before co-founding my own firm.
After that, I became an independent contractor under 1099. At that stage of my life, I remember being obsessed with making money on the side, whether it be in real estate or multi-level marketing. But, that plan didn’t exactly work.
So, instead, I pivoted and created multiple streams of income based on my experience as a financial advisor.
- Websites. My financial practice and GoodFinancialCents are two of the many income streams I have built over the years. Until recently, I was earning a side income while helping people decide which kind of insurance they needed through LifeInsurancebyJeff.com.
- Investing. Investing is the most obvious way for me to earn extra income. While everyone invests differently, most people use mutual funds, ETFs, or dividends to make extra income.
- Media deals. Media deals are another source of income. Years ago, I would never have imagined this happening, but it has worked out quite well. Putting myself out there by doing YouTube videos and interviews is something I enjoy already. Through media deals, I’ve had the opportunity to represent and market the products of big financial brands.
- Creating online courses. Additionally, I have launched an online course for financial advisors – The Online Advisor Growth Formula. Revenue from this resource alone exceeds $100,000.
But, I’m not the only one who knows this secret.
“When you are deciding on adding another income flow, I want you to consider something in the same industry or a parallel one,” advises Grant Cardone. “This approach allows these multiple flows to feed and fuel one another, which ensures their strength.”
As the expert in your field, you know the ins and outs like no other, he continues. Having to deal with problems on a daily basis is part of what you do. As a result, you could even invent a business solution to earn additional income.
“The possibilities are endless, and it’s the way to make this technique work without running in circles,” Cardone adds.
2. Make sure you don’t obsess over other people’s incomes.
Don’t be influenced by what others make. Instead, focus on you. Do what feels right to you, and forget about outside influences telling you you aren’t hustling enough. There is no guarantee that every income stream will be suitable for you.
Case in point, I had a chance to start a marathon when I lived in a wine country with a former client. Two problems. I didn’t drink wine. And, because I have bad knees, I hate running.
There was a lot of money to be made. However, I was neither knowledgeable nor passionate about it.
Relax and enjoy the feeling of contentment. You shouldn’t feel guilty about setting your own achievements and earnings goals. It’s incredible what happens when you realize what is good enough. Eventually, you become good enough.
Just because someone else made $15k last month with a blog, home-based business, social media influencer, or monetized YouTube channel, think twice before taking the plunge yourself. Don’t forget the cost you may incur in terms of joy, sanity, energy, time, and self-esteem. These are the things that may be taken away from you.
In short, there is no reason not to take chances or strive for success. Rather, you should decide what is best for you rather than what is appropriate for someone else when taking a risk.
3. Your other revenue streams are affected.
Let me tell you the story of Nathan Barry.
It’s 2007 and Nathan is studying graphic design and marketing at Boise State University. While building websites for companies, he dropped out of college and started his own business. During the global financial crisis of 2007/2008, however, work dried up, and he took a job as a contractor at a digital communications software company before going back to freelancing.
His sales soon exceeded $2,000 per month. His blog, eBooks, and packages with useful code and other resources for app-making were published through his blog and self-publishing. A lot of money was being made from the sales of his books. Within 24 hours of his first book launch, he did $12,000 in business, and the following day his second book launch did twice as much.
In order to build his subscriber list and promote his products, Nathan used Mailchimp to build his email list. Although he used the email marketing service and marketing automation platform, he always felt limited by their limitations. He then founded and became CEO of ConvertKit to solve this problem.
It was his opinion that he might be able to sustain both businesses simultaneously in a podcast interview. But he found that his book business took a serious dip as he couldn’t dedicate as much time to it.
Nathan eventually reached a crossroads. Shut down ConvertKit or devote more time to it to make it something special.
“So I shut down my course business because I’m not good at doing two things at once,” he said on the Go-To Gal Podcast. “I’m a focused person. And all these people are like, oh, I’m a serial entrepreneur; I run seven businesses. I’m like great, I’m so happy for you. That is not me at all. I run one business. And hopefully, I do it well.”
It is easy for new revenue streams to take over existing projects when added. As long as you’re not against dedicating more time to the project requiring more attention, that’s fine. However, if you do not look forward to your new project, you might find it challenging.
4. You’re a victim of shiny object syndrome.
For those not familiar with Shiny object syndrome (SOS), it is a state of constant distraction that arises from an ongoing belief that there is something new to pursue. As a result, it takes away from what’s already planned or in progress. It’s rooted in that childhood phenomenon of wanting a new toy even if you don’t want to part with your current one.
Basically, it’s chasing the next “Great Thing,” the current “Flavor of the Month,” or quick cash. While shiny objects may be appealing, they do not provide long-term benefits.
Decide what your goals are and how the new opportunity aligns with them. Think about the impact this new income stream will have on your life and business.
Understand the time required for the opportunity and what you hope to achieve. Take into account the required financial investment as well.
Consider taking action only when there are clear benefits. Do not overload yourself by doing too many things at once. Instead, focus on your current priorities.
5. Passive income isn’t really passive.
You should diversify your income into passive income assets. Ideally, this shouldn’t take a lot of effort or brainpower.
To keep passive income sources flowing over nicely and from grinding to a halt or even costing you money, you must still take action from time to time.
One of the best examples of this is investing in real estate. As much as you would like to see your portfolio generate rental income over time, you also need to accept the responsibility for maintaining the premises and resolving tenant issues.
This type of management can be outsourced to a third party. However, you should also take into account the associated fees.
6. More income streams, more responsibilities.
It’s hard to track multiple revenue streams without good reporting. As an example, you might have four streams of income to juggle. To properly evaluate revenues, expenses, and profits, you may need the assistance of an outside bookkeeper.
People don’t tell you that when you earn multiple streams of income, you take on more responsibilities as well. However, I began to realize which parts of the day-to-day task I needed to eliminate. You can do this by hiring virtual assistants and, independent contractors, or even full-time employees. But, the hiring process still can be time-consuming. And, this will also eat into your profits.
FAQs
Multiple income streams: what are they?
It just means that you have income coming from multiple sources if this is your first time hearing about it.
You have multiple streams of income if, say, you have a 9-5 job, drive for Uber, or create YouTube videos.
What are the benefits of multiple income streams?
Multiple sources of income are important because they allow you to retain your income if one source ceases or is eliminated. If anything goes wrong, there’s always a safety net to catch you.
Savings can be increased by earning additional income. Growing your savings account is key to protecting against unexpected costs and living cost increases, as well as reaching goals like early retirement.
To build wealth and succeed financially, you need multiple income streams. Many millionaires have more than one source of income. A variety of income streams allows you to have peace of mind about your finances because you aren’t dependent on one job or investment.
What are the best ways to generate multiple streams of income?
Investing in rental properties, buying stock market investments, or selling products or services online are all ways to create multiple income streams. In order to create additional sources of income, you should assess your skills and interests.
Can full-time workers create multiple income streams?
Yes. You can create multiple income streams as well as work a full-time job.
Often, people begin with part-time freelance work or side hustles, gradually increasing their income and potentially transitioning to full-time self-employment.
Which income streams are right for me?
It is important to take your skills, interests, and resources into consideration when choosing an income stream. Researching markets and identifying opportunities that are available and in demand is also helpful.
Developing multiple income streams gradually is okay if you start small.
Featured Image Credit: Pixabay; Pexels: Thank You!
