Six Reasons to Have Multiple Income Streams
Here’s why and how to find other sources of income to give you more options for whatever lies ahead.
If history has proven anything, it's that no economy - good or bad - ever lasts. Although you may be currently enjoying the healthy economy, remember that the “bad old days” of the recession aren’t far behind us. It's never a bad idea to consider multiple income streams to give you a little extra protection, as well as more options for whatever lies ahead. In other words, don't put all your eggs in one basket.
1. What if you lose your job?
The most obvious reason to have multiple income streams is to have some kind of backup if your main source of income goes away. Whether you're a business owner or an employee, the day may come where your steady paycheck goes away. Having at least one additional income source can mean the difference between a financial inconvenience and a major life crisis. Even if your secondary income source is not nearly as significant as your main income source, it can help provide you with some padding if disaster does strike.
2. Have you paid off your college debt?
Another reason to consider having multiple streams of income is to have some extra money coming in to help you pay off debt. This is especially helpful if you have large student loans to deal with. Depending on the amount coming in from your secondary source, you may be able to dedicate that stream solely to this purpose and not have to touch your primary source. The same line of thinking can apply to any other loan you might be trying to pay off. Even if it's just credit card debt, having a backup income source can keep you from having to make major sacrifices to your lifestyle.
3. Have a bigger checking account
The more money in your checking account, the more financial independence you have. It can be very nice to live your life not having to worry about whether or not you'll be able to pay all your bills on time or go without some of life's luxuries. It may be worth it to you to have multiple sources of income simply to live a more comfortable lifestyle.
4. Build your savings
Similarly, you may wish to pad your savings account, and having a secondary source of income dedicated exclusively to that purpose is a great way to do it. If you can live your day-to-day life on your main income source and stash away all or most of your secondary source, your future will begin to look brighter as time goes on. Financial experts advise everyone to have an emergency fund socked away to cover unexpected expenses.
It's never too early - or too late - to save for retirement. Even if you have a 401(k) or IRA working for you, a secondary income can start funding your golden years sooner rather than later. You probably have big plans for how you want to spend your time once you've put the workforce behind you. Putting in more work now will help ensure that you're able to achieve those plans rather than coming up short once it's too late.
6. More financial flexibility
Having more than one income stream means more financial flexibility in general. If debt isn't an issue and you have solid job security, you'll have more money to do with as you please, whether it's saving for retirement, your children's college funds, an extravagant vacation, or simply building up your nest egg, you can get to your financial goals much more quickly with multiple sources of income.
Check out your options
Create a secondary income stream that can supplement your primary income source. Start a freelance business on the side, operate a flea market booth, earn royalties on a book or other creative endeavor, engage in network and/or affiliate marketing, or buy and sell items online. Investigate opportunities in the “sharing economy” (driving for Uber or Lyft, renting out a room through Airbnb, etc.) Consider getting a second job.
It's never been easier to find a secondary income source. The Internet and digital age have opened up limitless possibilities. Do your research and find available options that apply to your knowledge and experience.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.