Job security… a thing of the past. I can count on one hand the number of people I know who have been with the same company for their entire career. Yes, it's true, they do exist. (I feel like I just admitted I had dinner with a unicorn last night).
Sure, back in the day, companies took care of their employees and in return employees took care of their company. The employer/employee relationship was rock solid and built on trust.
Fast forward to today and that trust is no longer there. Employers can (and will) lay you off without notice and with little (if any) severance. As a result, employees no longer feel that loyalty and as a result switch jobs, careers and/or companies every 2-4 years, in an effort to take control of their own career (and life). This uncertainty in the job force is like walking a tightrope without a net.
If you were laid off today, how long would you last without a paycheck?
Mitigating Risk Through Diversification
Today, having one income stream is much like investing all your money in one company. No one in their right mind would do that! Yet most do exactly that when you have only one job and nothing else. There is not a financial advisor in the world, who would ever say, “Sure, invest you life savings in one company.” That would be insane!
Diversifying your income streams (like your portfolio) is the way to mitigate risk and protect you & your family, should you lose your job. If you are like most then you are no stranger to job loss once at least once or if you are like me … 4 times. Three of those job losses were between Oct 2009 – March 2013, totaling 21 unemployment months. Good times for sure. NOT!
Making the Most of One Income
Before we get to the various ways of generating multiple income streams, lets talk a little bit about making the most of one income stream, also known as, how I got through 21 months of unemployment or control household spending.
I know that may sound crazy but controlling expenses is the ultimate way to stretch your dollars and give maximum flexibility to find that next job while stretching your dollars. Here are the key steps I took to cut my spending while still living a comfortable (albeit not flashy) life.
The bottom line is if you cant manage one income stream, how will you manage multiple? It doesn't matter how much you make, if you spend it all, you'll still have nothing to show for all your hard work.
Audit Your Expenses
Cutting expenses may not seem like it would be an additional income stream but it does allow you to stretch the money you do have. That is just as important as having multiple incomes. Again, it doesn't matter how much your make – it matters how much you keep. There are lots people who make a ton of money but spend it as fast as it comes in. There are also people making a modest income and are able to retire early because they were disciplined to save and invest most of it. Its all about priorities. Which person do you want to be?
If you haven't already, take a look at your expenses and start cutting. You would be surprised how much you can cut before it starts impacting your lifestyle. Cut your dining out in half. Be more intentional with your buying. Think through purchases with a watchful eye and postpone any big purchases. Cancel any and all subscriptions and memberships. Meet friends at free events. Make coffee and pack a lunch. Every little bit helps.
Credit Card Debt
Get rid of as much debt as possible. Just like cutting expenses, getting rid of credit card debt will save you hundreds of dollars that leaks from your bank account. Don't believe me? Think about it.
That TV you bought for $500 last week with your credit card will cost you an extra $75 a month in interest and penalties if not paid off in full and on time.
Stop giving your money away to the credit card companies (who are only too happy to keep you in debt).
Never leave free money on the table.
Never leave free money on the table. The credit card companies live by this rule and at your expense. Cut them off. Credit debt is like a weight slowing you down. Just think of what you could be doing with the extra money. Build an emergency fund maybe?
If you don't have one already, no time like the present. The money cut from expenses should be put towards an emergency fund. So really you are still “spending the same” only now you are paying yourself.
Sadly, most people live paycheck to paycheck. When that paycheck is taken away it can be devastating. Worse, in a tight job market we could be looking for employment for a while. Without an emergency fun you could be stuck with whatever comes your way.
Not having an emergency fund takes away your freedom of choice – don't let that happen. Give yourself the gift of independence and time to find that right job instead of any job.
Clear the Clutter
Yes, that is correct, go through your house and get rid of everything you don't need or use. Sell it on Craigslist, eBay or the dozens of other sites out there to make a little extra cash.
This will do 2 things for your bottom line: 1) put cash in your pocket or your emergency fund and 2) have less stuff to keep track of and maintain. It's a win-win.
Now that we have covered the bases of how to manage the one income stream, lets talk about a managing multiple income streams in addition to your day job.
Did you know that before Jay Leno became, well, Jay Leno, he always had 2 jobs and lived off the smaller paycheck of the two. The larger paycheck was always socked away and invested. True story.
Do Your Homework
Here are a few common income streams to think about that are relatively easy to pick up.
Spouse Gets a Job
Two income households are common place, true. But how many 2 income households are disciplined enough to live off of one income? Are you up for the challenge?
Fits in great for evening and weekend work. Especially if you like people and have a great sense of direction.
Rent a room out of your house either for short or long term visitors. Its a quick way to make a buck.
Bar none, this is one of the best ways to make some extra income, but a lot more research is required before your start in this line of investing. Do your homework!!
Become a Freelancer
There are plenty of sites you can list your skill set on and work from home setting your own hours. Sites like Fiverr and Upwork are great places to start.
Literally there are dozens of opportunities to make up your multiple streams of income, whether that is passive or a full on side gig, the combinations are almost endless.
Having multiple income streams in combination with controlling spending is by far the best way to be on the road to Financial Freedom Early Retirement (FIRE). 😉
I tell people all the time… even if you made FIRE a goal for only a year, it would put you further ahead than you think possible.
What ways do you make extra income? How do you Grab Your Slice of Financial Independence?