Here are 5 reasons why you need multiple streams of income.
There is an old saying; don’t put all your eggs in one basket. This is true. However, I would say you need multiple sources of eggs and more than one basket!
Most people only have one source of income. Their job. Maybe, next in line would be a bank account that earns a few pennies per month in interest.
There are numerous ways to go about building streams of income.
These sources of income include: working salary, stock market (dividends), side hustles, bonds, real estate (like rental properties), royalties (like from publishing a book), and online (like blogging, YouTube, surveys, or selling stuff).
Passive income is the best kind of income, in my opinion. That is income you don’t have to put in labor for. Rather you earn income while you sleep.
For myself personally, I am investing primarily in dividend growth stocks.
I’ve built a six-figure portfolio that generates a yearly average of over $1,000 per month in dividend income! That is passive income that I earn while I sleep!
This is what I am doing, but you may choose another path altogether. We all need to build multiple streams of income for cashflow.
Here are 5 reasons why!
5 Reasons Why You Need Multiple Streams of Income
Reason #1 – Job Loss
For most people, their job is their primary, if not their only, source of income. Once that is gone, disaster sets in.
We only have to look at recent years to know this. Due the Covid-19 pandemic, over 22 million jobs were lost in advanced countries.
Suddenly, millions were unable to pay their rents or mortgage. Millions more struggled to put enough food on the table. And millions remained unemployed and unable to find work.
In short, they were in an awful position (and many still are).
If your job is your only source of income, you put yourself at risk due to job loss.
Losing your job can be a traumatic experience for many people, with life changing effects.
When your income derives from multiple sources other than your job, you are able to alleviate or eliminate altogether, the devastating effects of job loss.
Reason #2 – Emergency
Emergencies will happen. You can’t always predict when they will happen, but know that eventually they will. These can be very stressful times.
Surveys show that most Americans (56%) couldn’t cover a $1,000 emergency expense with savings.
An emergency could be a sudden illness or injury, an appliance or plumbing issue, a car breaking down, or even a job loss.
Most recommended 3-6 months of expenses covered in case of a job loss. How long could you survive on your savings if you lost your job?
When you have multiple sources of income, emergencies will be less stressful knowing you have the funds available to handle the situation.
Reason #3 – Financial Freedom
Financial freedom is the goal everyone should be striving for.
When passive income exceeds your expenses then financial independence is achieved. You no longer have to work to pay your bills.
The easiest way to achieve financial freedom is to invest in sources that provide passive income, such as dividends or rental properties (let’s also assume you outsource the landlord work to a property manager).
Time is the most precious resources and we all have only a limited amount.
With financial freedom, you are in control of your time, not your job. The setting the alarm to get up for the 9-5 and counting down the clock to go home is gone.
You control your time and what you do, not your employer!
Reason #4 – F-You Money
This kind of relates to the last reason. What is F-you money?
Most people do not like their job. Maybe because of long hours, low wages, rude customers, back-stabbing coworkers, and/or a hostile work environment.
Another major reason many don’t like their jobs is that the boss, manager, supervisor, etc., is an incompetent SOB with the ego of a corrupt tyrant.
Sadly, there are many abusive bosses out there.
Even sadder, there are many workers who put up with their abusive bosses. They have no choice. The paychecks their employers provide pay for their homes, food, transportation, and even their fun.
In other words, there are at the mercy of their boss who can fire them at any time and leave them destitute. And many abusive bosses know that.
But when you have multiple streams of income, you become less reliant on your boss’s paycheck.
Your employer’s power over you weakens. And when you have enough income from other sources, you don’t even need your job anymore.
That is when you don’t have to put up with an abusive or incompetent boss. You can tell him or her “F-You” and walk out the door in style. Sounds good, doesn’t it?
5) Peace of Mind
Stress related to money is common for most people. It hurts your mental health, breaks up marriages / families, and reduces you overall physical health.
When you have multiple streams of income you have less worry and more peace of mind.
If one of your income streams happens to dry up, you have several more to take its place.
Life is never truly prefect. There are ups and downs all the time. However, when you have multiple streams of income, money is one less concern to worry about.
Conclusion
And there are 5 reasons why you need multiple streams of income.
Many may wonder, where to get started in learning about personal finance. Knowledge about finance is key to building streams of income.
While I am not a licensed financial advisor of any kind, I have built up plenty of experience and knowledge over the years.
For beginners, I created a page called “Getting Started”. I list some resources there to help you get a basic start to dividends and personal finance. These are resources that helped me many years ago.
Best of luck to you all!
So, what do you think of this post? Do you have multiple streams of income? Also, which reason do you think is most important?
Let me know in the comments below!
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