Just having one source of income is dangerous these days. Gone are the days where companies actually takes care of their employees. Companies cut out unnecessary employees quickly and doesn’t provide a pension for them anymore, either. Times are changing.
Many decades ago, it was completely fine to live on one source of income. One person’s income source fed a family of four, bought a house, a car, and provided basic living necessities. They STILL had time to take care of their retirement on top as well because of generous pension policies.
However, something changed as time passed. This website of what happened in 1971 is a prime example of the drastic changes that happened since 1971. People have a savings rate of in the low single digits as of July 2022.
These days, even with a six figure salary, it’s not enough to feed a family of four AND still have enough money leftover to fund your retirement. We need more than that. If $2 million is the new millionaire, then $200k salary is the new $100k salary.
It’s very difficult to get to a $200k salary from a 9-5 alone. Relying in one source of income is very dangerous these days. Just as your employer giveth. Your employer can taketh away and leave you and your family hanging on for dear life. That’s dangerous.
Multiple income sources is a necessity.
Why One Source of Income Isn’t Enough
One reason why one source of income isn’t enough is because you’re not SMASHING that social share button and sharing with your friends! Your friends could be in dire trouble if they don’t try to get multiple sources of income and it’s high time to change that.
It’s time to give the power back to the employees by not relying on a single source of income so much. So with that said, let’s go into the reasons why we need multiple sources of income.
1) Income Diversification Matters More Than Ever
Back then, companies took care of employees. Layoffs rarely happened as long as the company was financially solvent. They did a good job of moving employees around to another division if another division ran into trouble. These days, it’s completely different.
Gone are those days where big companies almost guaranteed a job.
Now, if the company doesn’t need you, they just lay you off and move on to the next one. Almost every employment is “at-will”. One source of income subjects you to those risks. And the risk is huge. Why? The change can happen quite suddenly. There’s no notice if it’s just you getting laid off.
Companies just call you into the conference room one day with HR and BOOM. It just happens. Yes, it seems like we have to spend an endless amount of time on work just to earn enough money to keep us alive. There’s no time to just enjoy life anymore. However, that’s just the reality these days.
Putting in a work for a couple of years to set yourself up for your lifetime is worth it.
2) You Get Wealthy Slowly
There’s nothing wrong with maximizing your 9-5 income. In fact, it’s one of the healthiest ways to achieve upward mobility. However, imagine a world where your side hustle pays for 100% of your expenses while you save and invest one HUNDRED PERCENT of your day job income.
Think just how much faster you can build wealth with those kinds of numbers. It’s not going to happen in one year, or even maybe two years. However, it can happen after 3 – 5 years of putting in the work and hours every week. Magic happens after consistently putting in the effort for years at a time.
Having one source of income prevents you from building wealth quicker. You definitely can’t get rich quick but you can get rich quicker than the alternative of only having one source of income. Multiple sources of income won’t hurt in getting you there.
3) You Don’t Increase Your Skills
I currently work in finance, dealing nothing in terms of search engine optimization, social media influence, and the like. However, since I started this blog in 2022, I learned all of those things. There’s still so much more for me to learn.
However, I diversified my skills so much that I could apply for one of those jobs outside of finance. I can’t imagine just how much more I’d learn if I just put in one more year of work into learning those skills. Specialized skills are in so high demand these days.
Automation is destroying so many jobs that required physical labor to do before. Therefore, diversifying and increasing your skills is another way to diversify the risk away from a possible recession. One source of income only limits you to learning one skill.
Pursuing a side hustle may just change your life for the better.
4) One Source of Income Limits Your Upside
A 9-5 income provides limited upside. You do a good job one year and then boom! next year, you get a 3% raise. Even with 9.1% inflation. That’s a limited upside. Yes, it is safer than creating a business because your customers are more fickle than your company.
However, you’re giving up upside for safety.
What if there’s a way to have the best of both worlds by working that 9-5 job AND also creating a side hustle on your free time? You can easily have the best of both worlds of both upside AND safety. One source of income doesn’t provide both.
There’s less risk of starting a business if you start one when you don’t have to. Similar to how the best time to look for a job is when you don’t need one. The best time to start a side hustle/business is when you don’t need to. You have more negotiating power to walk away.
While your friends are relaxing, you are working on your dreams. That’s how you get ahead.
What to do When You Have One Source of Income
So then, it’s high time that you start that side hustle you’ve been putting off. You need multiple income sources these days! How do you go about doing so? The answers are below.
1) Start Side Hustles
With the power of the Internet, there’s an infinite number of side hustles that you can pursue. You can write a digital book, start a blog, a YouTube channel, sell things on the side, or any number of a different things. The opportunities are unlimited.
My side hustle of starting a blog is not paying off even after 2 years. In fact, I’m even losing money as a result of the blog. However, that’s completely OK. If it never takes off, I’m OK with it as well. I just have so much fun blogging and helping other people with their finances.
The point is, I’m doing everything that I possibly can in order to diversify away from one source of income to multiple. It would deeply hurt me if I got laid off tomorrow and I had nothing to show for it. I want to have at least created something to give me years+ of a leg up to starting a side hustle.
This blog is helping me.
2) Start Investing Money
Investing is one of the easiest ways in order to diversify your income. There’s multiple investment options these days to build wealth and become rich. The easiest investment option is to buy and hold index funds. It is the tried and true method of building wealth.
Although past results doesn’t always predict future results, index funds are more likely to outperform in a bull AND bear market. The S&P 500 created so many millionaires and I expect it to create many more millionaires down the road. There are multiple investment vehicles for you to take advantage of.
The rich get richer and the poor get poorer because of the difference in how they spend their money. The rich stay rich because they spend money on assets that make them more rich. The poor stay poor because they spend money on things that lose them money.
It’s high time to change that because one source of income is very dangerous. Investing in many high quality assets solve this.
3) Save More Money
You can’t invest anything if you don’t have any money in the first place. Instead of worrying about diversifying your one source of income, it’s time to worry about saving more money to have a war chest. Not only does saved money serve as a war chest, it’s insurance for the future.
When you have and save more money, there’s less need to rely on unemployment payouts to keep you afloat. You can remain and stay on your own two feet instead of relying on the government to fix your problems. In 2022, I decided to pad up my emergency funds to the max.
I currently have six months worth of emergency funds and I want to get to at least one year’s worth of emergency funds. That way, it gives me the firepower to actually go out and create multiple sources of income if push actually came to shove.
4) Build a Business for the Long Term
There are many people who create a business and then they quit after one year. Business is not something you can create success at after one year. While it is possible, many took years, and even decades before their business finally came to fruition.
I’m on my second year of creating a business and I’m not sure if it’ll ever pan out. However, I’m OK with that. Because I’m looking at the long term. I’m expecting results to come around the fourth year. That’s when I’ll know that I’m not relying on one source of income.
Creating a business is a great way to diversify your income sources. The more passive your business is, the better off you are. That way, you have more free time to pour into other income generating areas without working an extra hour. There’s never been a better time to start a business than now.
One Source of Income is Dangerous
One source of income is what destroys many people. They think their job and company is going to take care of them forever until they don’t. When it comes to a life or death situation, you don’t want to live dangerously. You want to live safely that provides the biggest returns.
Especially if you’re not the only one who relies on your income. If you have a family, it’s not the time to YOLO your life savings on GameStop and hope it works out. It’s a time to protect yourself and create a solid financial foundation for your future.
Weekends are absolutely the time to relax and recharge. However, if you feel like you have too much time on your hands after the weekend is over is when you should make the most of it. Too many people sit on the couch doing nothing for 52 weekends out of the entire year.
It’s completely OK to do so every weekend in a while. However, it’s not OK to do so every weekend. There are some weekends where I am jam packed and I want to take the next weekend off. So what do I do? I do exactly that and take it easy the next weekend.
One source of income, unfortunately, is just a good starting point to building wealth these days. You have to do extra things in order to keep families afloat and combat the effects of inflation. It may get hard at times, but giving up is not an option.
Why One Source of Income Isn’t Enough Shortlist:
- Income diversification matters more than ever
- You get wealthy slowly
- You don’t increase your skills
- One source of income limits your upside
