While learning to improve my finances, I heard my rich people talk about multiple streams of income. At first, I thought that was a strategy to become rich. And since, at the time, I was concerned only with paying off my debt, I figured that it didn’t apply to me.
It turns out that it did. Actually, multiple streams of income applies to everyone who wants to minimise risk and increase their chance of getting out of debt quickly and saving money. I found out this the hard way.
Multiple Income Streams Serves as a Safety Net
After I got off the street and found a job, I worked at a restaurant for a low-paying salary. I had grown weary of the hospitality industry, so I quit and became a freelance writer. I even managed to find a client who enabled me to work online and paid me weekly. Everything was going great for months until it no longer was.
Out of the blue, that client stopped sending me work. She told me that the content department wasn’t profitable and they decided to shut it down.
I lost the only client and income I had. All of my hopes were pinned on this client sending me work and when that stopped, I panicked. Just months before that, I was living in my car on the street, and I didn’t want to go back.
The only solution was for me to find another client. But I did better than that. I managed to find two clients. I learnt that a client could cut their ties with me at any stage, and I didn’t want to be back at square one. After I added two clients to my portfolio, I added one more.
If one of the three clients parted ways with me, I would still receive income from two of them. That was a better scenario than having no income.
This concept also applies to people with a full-time job. If you only have one job and lose it, you’re stuck without an income. To prevent that, seek part-time work at night, preferably online, or on weekends. If you lose your main job, you can make your part-time job your full-time one. Even if it doesn’t work out that way, at least you’ll have some income. Something is better than nothing.
Diversification
The first lesson in investing is diversification. It simply means investing in different assets, whether they be in various asset classes, regions or industries. The strategy is to minimise risk, in case one asset class fails to provide returns, you have other investments that may realise a profit.
The same holds true for receiving a salary from various sources. Ideally, you want your income streams to be from various industries or countries. Artificial intelligence (AI) has left many writers without an income. Some writers had several clients before the advent of AI and lost all of them. This happened to me.
That’s one of the reasons that your income should be from various industries. If one of my income streams was from writing and others were from, as an example, design and vending machines, I would not worry about AI taking over the writing industry. It hasn’t affected the two other industries, so I would still receive an income from them.
Paying off Debt
Your income increases as you add various streams. One of the key reasons you want to increase your income is to pay off your debt as soon as possible. Prolonging the debt repayment may result in a loss of motivation. Paying off debt is a gruelling process, and you reduce the pain by settling your debt quickly. If you have only one income stream and lose it, you won’t be able to pay your debt.
But with multiple income streams, you’re likely to be in a position to carry on with your debt repayments. This enables you to avoid a foreclosure on your house, your car being repossessed (it happened to me) and having a bad credit record (also happened to me).
Final Thoughts
Multiple income streams is a basic concept, yet most people don’t practice it. They’re either lazy or feel that their sole income is secure. Regardless of how big the company is that you work for, you can lose your job. What if you lose a body part, disabling you from carrying out your duties? In such a case, it would be nice to already have an income stream that you make from talking. This can be making videos on YouTube or being a public speaker. But to have that income stream, you have to start.
That’s the power of multiple streams of income. And it’s vital for you to have them if you want to reduce the risk of being without an income, which has a ripple effect on your health, relationships and socio-economic status.
By increasing your income, you expedite your debt-repayment journey and reach financial freedom sooner.
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