Did you know that 4 in 10 Americans have a side hustle or extra source of income? That means that one of your family members, a friend, or a colleague could be working a second job or freelancing online. Or maybe the side hustler is you! Creating multiple streams of income is becoming popular among many Americans, and for good reason. Here are 7 reasons why you should have multiple streams of income if you don’t yet.
7 Reasons Why You Should Have Multiple Streams of Income
This post was written by our staff writer, Kimberly Studdard.
1) Provides A Safety Net
First, multiple streams of income provide a safety net for you. If you only work a 9-to-5, you are dependent on that income alone. So what happens if you become ill? What do you do if you get laid off or fired? How will you bounce back from losing your job?
If you only relied on that one source of income, you may soon realize that you either:
- Need to get a new job fast, or
- You may get into debt while trying to get yourself afloat.
But if you have multiple streams of income, you can support yourself financially for at least a little while, and it gives you the opportunity to grow those avenues to earn even more money should you wish.
Putting all of your eggs in one basket is never a good thing, and the same goes for trusting your 9-to-5 to always be available to you. Multiple streams of income provide a safety net should you ever find yourself without a stable job or income.
2) Creates More Financial Security
Not only can multiple streams of income provide a safety net for you, but they can also create more financial security for you.
If your day job pays for your bills, you can then use your other income to save, invest, and more. You’re able to make decisions that affect your now and your future. Plus, when you save your extra income, you’re able to build a nest egg just in case anything were to happen. Wouldn’t it feel good to have an extra $10,000 in the bank just in case you need it?
3) Helps You Pay Down Debt
For some people, having multiple streams of income means more money that they can throw towards their debt. Not only can earning extra money mean you can save more but if you’re in debt, especially high figure debt, earning extra money means you can knock it out a lot faster!
Now, if you are creating another stream of income to pay off debt faster, keep in mind that you still have to report your extra earnings. So put some aside for savings and taxes, and then use the rest as you please! Paying off debt faster is easier when you’re earning more money through a side hustle or other income source.
4) Allows You To Build Sinking Funds
Along with regular savings, having multiple streams of income means you can have dedicated categories for your savings.
Sinking funds, like…
- Saving for Christmas, or
- Saving up for new tires on your car
…are a great way of telling your money where to go. They also allow you to save so you aren’t surprised later.
For example, we all know that Thanksgiving happens every year. But sometimes, you lose track, and the next thing you know, you’re scrambling to buy all of the food and paying the costs for it. For many people, paying for Thanksgiving dinner can put a huge dent in their wallet, especially when catering to a large family. But when you have multiple streams of income, and those extra dollars help you fund your sinking funds, that’s one less thing you have to worry about.
5) Allows You To Be Creative
Having multiple streams of income isn’t all about the money. In fact, sometimes people start a side hustle, small business, or freelance because it’s fun and a creative outlet! If your 9-to-5 pays well and isn’t terrible, but isn’t fulfilling you and what you want out of your life, create a new stream of income!
You can find a creative outlet that:
- you enjoy,
- earn money from it to pay for the hobby itself, or
- put a little extra in your pocket, and have something to do besides sitting at a desk all day.
…Which brings me to my next point.
6) You Earn Vs. Spend
When you have multiple streams of income, you are spending your time working on them. That, in return, means you’re less likely to spend money.
When you’re busy with a business or side hustle, you don’t have time to shop mindlessly online or go and spend a bunch of money. Instead, your focus is on your hustle. Which means that you can save even more money in the long run, just by having an extra stream of income, even if you don’t make much from it!
7) Allows You To Take More Risks
What would you do if you knew you weren’t worried about money?
- Would you take more vacations?
- Start a new passion-based business?
- Or maybe you’d invest in a few up and coming businesses.
Whatever the case may be, having multiple streams of income allows you to take more risks.
You’re less worried about paying your bills and debts, and that allows you to then focus on living your life to the fullest and taking advantage of whatever comes your way. And who doesn’t want to live life to the fullest?
Multiple Streams of Income – Are You Ready?
Having options is a big deal, especially when it comes to money. Having multiple streams of income means you can do more with your money and spend less time worrying about it. And that is the ultimate reason why it’s important to have them!
Are you ready to create multiple streams of income?
AUTHOR Kimberly Studdard
Kim Studdard is a strategy consultant and course launching expert. When she isn't spending time with her daughter and husband, or crying over This Is Us, you'll find her teaching other mompreneurs how to scale their business without scaling their workload.