Since you’re reading this post it’s safe to assume you’re on the path to getting your finances into good shape. I’m sure most of you have read about the importance of diversification of your investments in order to position yourself to weather any financial storms, the essence of this being the old idiom: “Don’t put all your eggs in one basket”.
Here I’d like to take the logic of diversification one step further to income diversification. After all, we can only invest money that we “bring in”, so it’s equally important to diversify your income. Ever since the great recession jobs have become less secure. The lower sense of job security has lead to an increase in underlying stress levels for many of us. One sure way to gain more peace of mind when it comes to your financial situation is to diversify your income.
The average millionaire has seven income streams. Actually, you likely have more income streams than you think. The goal is to maximize the income streams you already have while also developing additional sources of income.
If you have children, there are many benefits to having either you or your spouse work half time, or not at all, allowing them time to take care of the home front and keep your children’s schooling and extracurricular activities in order. That said, it’s common today for both spouses to earn income in order to help reach short and long term financial goals. Planning for your spouse to generate income in addition to the families primary income is a good option for income diversification.
To ensure true diversification, you should try to arrange for your spouse to be working in a different industry than yours in order to “keep your eggs coming from different chickens”. If there is a downturn in either of your industries leading to work reduction or layoffs, the other’s income would be able to sustain until both incomes are back to your target levels. A few options to consider are for your spouse to have a full time job, to arrange for a part time job to fill the time while your children are in school, or to bring in a more creative form of income through some of the opportunities we’ll look into below.
Start a Blog
Starting a blog is a great option if you enjoy writing and have a subject area you would like to research and write about. Many blogging opportunities don’t require you to be an expert in the field. The main prerequisites are that you’re more experienced in the focus area than your average reader; you have a considerable interest in the subject; and you enjoy the process of sharing knowledge and information with others.
The path to income through blogging is not a quick one. It can take a year or more to develop enough readership to be noticeable. There are two main drivers of income through blogging:
- Acting as an affiliate marketer: A few of the top affiliate programs are Clickbank and CJ Affiliate, and Rakuten Affiliate Network.
- Pay-per-click advertising: Two of the top PPC advertising programs are Google’s AdWords and Microsoft’s Bing Ads.
Both of the above are often used in conjunction. To be successful at either of these methods, you need to have a substantial number of readers of your blog whom are engaged enough in your content to be driven to click on affiliate links and/or well placed advertisements.
Below are a few strategies for you to research and put into practice to get the blogging income stream flowing:
- Be a consistent blogger. Whether you post 2 times per week or once every 2 weeks, consistency is the key
- Use search engine optimization (SEO) to increase traffic to your blog.
- Consider search engine marketing (SEM). If you’re serious about blogging as an income stream, a paid search method such as Google Adwords can be used to increase traffic
- Use social media outreach to build credibility and readership
- Learn the art of subtly incorporating the marketing platforms mentioned above into your blog.
A side hustle is a small-business run on the side while holding down a 9-5 job as your main source of income. The “hustle” refers to the driven entrepreneurial spirit necessary to bring a side hustle into fruition. Side hustles can come in all shapes and sizes, and can range from doing grunt work for a wage to a unique skill or interest that can be capitalized on to generate income. A few examples of great side hustles are:
- Writing and self-publishing e-books to be sold on Amazon,
- Turning a hobby such as knitting into a product line for sale via a stand alone website, or Etsy.com,
- Capitalizing on the excellent SEO skills you’ve gained through running your blog and providing a service to others bloggers willing to pay for you to work your SEO magic on their website.
For a wonderful compilation of successful side hustles in action, head on over to the Side Hustle Series at Budgets are Sexy.
From providing a service, to selling items you’re no longer using, to just surfing the web, opportunities for generating income online abound.
If you can write good copy, design a webpage, make a YouTube video, or even sing and dance, you have a service that someone in the world would be willing to pay for. Many individuals and businesses are in need of services on a one-time or limited basis and are seeking service providers through sites like Elance.com or Fiverr.com. It’s truly amazing how much the internet can extend your reach all around the world.
If you’re willing to part with items laying around your home which you’re no longer using, such as books, DVDs, toys, sporting goods, electronics, and even furniture, you’ll likely be able to sell them on one of the sites listed below:
A recent addition to the ability to earn income online is through programs that offer rewards for simply doing what you usually do on the web… surfing. Head on over to The Penny Hoarder to learn about one of the best online rewards programs in a post called How to Make Extra Money With SWAGBUCKS.
The holy grail of income streams are the ones that keep flowing with little to no effort on your part. This type of income is referred to as “passive income”. It usually takes a good amount of time and/or capital to develop a passive income stream, but once the upfront work is done the ratio of work to income can be excellent. Head over to Real Passive Income Ideas for a list of 43 passive income streams worth consideration.
One of the most common and proven passive income streams is the ownership of a rental property. This one of course takes a substantial upfront investment of capital, and requires some careful research to find a good location and market favorable conditions. After the property is in your name, the tenants are moved in, you’ve set up agreements with maintenance services, and you’ve secured a reliable property management service, there’s very little work to be done on your part to keep the money coming in. Also, rents increase at a much quicker pace than the underlying expenses (above mentioned services and your relatively static mortgage). So, if all goes well, the cash flow from this passive income stream will increase as time goes on.
The peace of mind obtained when you diversify your income streams is well worth the effort to research and develop your new opportunities. Hopefully this post will cut down on the research portion so you can get on with the building of wealth.
If you have experience with any of the income streams discussed above and/or the process of income diversification, please share in the comments below.