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Did you know that the average millionaire has seven streams of income?
That’s because having multiple income streams is one of the best ways to create wealth and financial security.
There are many benefits to having more income streams, and in this blog post we will discuss some of the best reasons to have multiple income streams starting today.
Table of Contents
13 Reasons To Have Multiple Streams Of Income
What Is Multiple Income Streams?
Before we dive into the reasons you should have more than one stream of income, we need to understand what it even means.
Basically, it means you have income or money coming in from various jobs or activities.
For example, most people only have a single stream they earn money from, their full time job.
This is the income they use to pay their bills, save for retirement, invest, and more.
For many people, it comes as no surprise that when you live this way, money tends to be tight.
Some months you might have to choose between saving and paying your bills.
Other months, not so much.
With multiple streams of income, you don’t have to make these choices because you have money coming in from various sources.
For example, you have your career and then you work a second job.
Or maybe you have a career and you started a small side business.
These are examples of having more than one income stream.
And while most people stop thinking about this idea at this point, you can easily have more streams.
If you invest in dividend paying stocks, this is an income stream.
So is any income from rental real estate.
The reality is, the more sources of income you have, the easier it will be to reach your financial goals.
Think of it like a lake.
If there is one river flowing into it as its source of water, there is a lot of risk.
If that river is dammed or something happens, the lake dries up.
But if there is the river flowing into the lake, as well as additional creeks and streams, chances are the lake won’t dry up.
Finally, there is a difference between active income streams and passive income streams.
Active income is doing work to generate income.
So working a full time job is considered active.
Passive income are other income streams that allow you to earn extra cash without working.
Examples would be investing in the stock market or in rental property.
Basically, it is income you earn without having to work to earn it.
Now that you know what multiple streams of income is, let’s look at the many ways it benefits you.
#1. Pay Off Debt
Most of us are saddled with high interest debt. It could be from credit cards, student loans, even an auto loan.
Having these monthly payments makes it harder to live financially.
But if you have other streams of income, you can more easily pay off this debt, and even pay extra.
This is what I did when I worked a second job and was trying to pay off my credit card debt.
I put all the money I earned from that second job towards my debt.
I didn’t budget it for anything else.
Then I took my regular income and budgeted that.
I pretended I didn’t have the extra money going to my debt, so I budgeted money from my main paycheck to go towards this.
Doing this allowed me to pay off my debt a lot faster than I otherwise could have.
- Read now: Discover the power of the debt snowball
And when you don’t have money going towards debt, you have more money to save.
#2. Build An Emergency Fund
Speaking of saving money, once I paid off my debt, I quickly built up my emergency fund.
I took all the money I had from my second job, as well as the monthly debt payments I was paying from my regular income and putting it all towards my emergency fund.
This quickly allowed me to save 6 months worth of my income for unexpected expenses.
It also gave me emotional relief as I knew I had a solid financial foundation should any surprises happen.
This is a great reason for creating multiple income streams because most people save little or no money.
By having more income, you can build your emergency saving much faster.
#3. Break The Paycheck To Paycheck Cycle
If you are struggling getting by each month, having a bigger monthly cash flow from multiple income streams is going to make your life easier.
You will be making money to pay all of your bills each month and have cash left over to save.
Much of the stress you are experiencing now, like stress, embarrassment, and anxiety will go away.
The bottom line is, you will be on a path of wealth building and be enjoying every aspect of life much more.
#4. Reach Your Financial Goals
Expanding on the points above, having more money coming in allows you to reach your financial goals.
Do you want to save for an epic vacation?
Maybe retire early?
When you put more money away, you make these goals more of a reality.
For example, let’s say you need $10,000 for your epic vacation.
If you are saving $200 a month from your income, it will take you over 4 years to reach your goal.
But if you save the $200 plus $250 from a side job for a total of $450 a month, you now reach your goal in less than 2 years.
#5. Gain New Skills
Depending on what you do on the side, you could learn new skills.
If they are in the same industry as your career or closely related, this could give you a reason to ask for more money from your current employer.
If they decline a salary increase, you can add these skills to your resume and become a stronger job candidate for a new job.
- Read now: Here is how to get larger raises at work
And there is a good chance you will earn a higher salary from the new job than you are currently making.
This is arguably the biggest benefit of having multiple streams of income.
You take away the risk of only having a primary source of income.
Think of it this way.
What are you going to do if you unexpectedly lose your job?
You are going to scramble to find a new one.
And if you can’t find one quickly, you might have to resort to taking a lower paying job just to have money coming in.
Now picture yourself with two paychecks.
You suddenly lose one from a job loss.
You are much less stressed and don’t have to settle for a lower paying job because you still have money coming in.
It is similar to those of you who are married and both spouse’s work.
If one spouse loses their job, money is going to be tight, but you still have an income to help cover some bills.
Now imagine how much more stressful life would be if both of you lost your jobs.
#7. Financial Protection
I touched on the idea of job loss already, but want to expand on this idea some more.
Having extra income streams protects you.
Let’s say you have some rental income, the economy gets bad and you lose your job.
Because not many employers are hiring, you might not be able to find a job right away.
With a steady income on the side, you are protected from financial disaster.
Without this extra income, you might have to rely on credit cards to survive.
This is a dangerous cycle as you are adding more monthly payments, increasing the income you do need.
And if things get really bad, you might end up maxing out your credit cards, or worse, stop paying them, leading to even more financial trouble.
- Read now: Find out what happens if you stop paying your credit cards
- Read now: Here is what you can expect if you max out a credit card
#8. Passive Income
Depending on the side hustle you choose, you might be able to earn an income without having to do a lot of work.
For example, maybe you put money into dividend paying stocks.
These stocks pay out quarterly dividends to you as an investor.
So each month, you might get paid a few hundred dollars.
Over time, as you build this investment up, you could turn these dividend payments into a strong income stream.
In fact, this is what some retirees do.
They invest in high dividend paying stocks and use the income they produce to supplement their retirement income.
Or you could focus on investing in mutual funds and earn an income from capital gains.
But it doesn’t end with the stock market.
You could invest in real estate or a small business and earn a passive income stream here too.
Or you could start a website or YouTube channel.
You could even try your hand at peer to peer lending.
In the early stages, these will require a lot of work on your part, but over time, can turn into a more passive source of income.
#9. Do What You Enjoy
Another major benefit could be long term happiness.
Maybe your day job doesn’t inspire or excite you any longer.
So you start something on the side as a hobby and come to find it is something that excites you.
You now can take the time to see if it is possible to turn this hobby into a full time income to replace your job.
At the very least, even if it doesn’t completely replace your income, maybe it can replace a good percentage of it.
If this is the case, then you are able to find another job that you enjoy and might even pay less since you have other income coming in.
#10. Ability To Take More Risks
When you have multiple sources of money coming in, you can take additional risks with life.
Maybe you are pregnant and are thinking of taking more time off work than your company allows.
This could be tough if you only have a single source of income.
But if you have a side income, you can make it happen.
Even better if you can work the side hustle for a few hours here and there to keep the money flowing.
Or maybe you lose your job and you want to pivot to another industry or do something completely different.
Since you still have money coming in, you can take this risk.
Finally, you might have worked a second job and saved all the money up.
Now you have a healthy savings amount that allows you to change careers.
Early in my blogging career, I wasn’t budgeting the income I was making.
I paid all my business related bills with that income, put money into a retirement account and then saved everything that was left over.
This was a few thousand every year, which really boosted my savings and would allow me to have options in the coming years.
#11. Find A New Career
You never know what will come when you create multiple income streams.
Take me as a perfect example.
I was working a job I enjoyed and one day started blogging on the side.
It was something I really enjoyed doing.
Then one day, I got called into my manager’s office and was laid off.
I was completely blindsided.
Over the next few days, I was applying for new jobs, but also working on my website.
Then the light bulb hit.
I wanted to try blogging as my main income.
Because I had used this income over the years to build my savings, I had a financial cushion.
I gave myself 6 months to grow the business.
If I didn’t grow it, I would start looking for a job again.
If I grew it, I would give it another 6 months.
I would repeat this process until I was earning the same as or more than my last job.
It’s been close to 10 years now.
I never would have thought that my website would be my career when I started out.
It was just a fun thing to do on the side.
But it turned into a career with many benefits that I couldn’t have imagined.
#12. Tax Advantages
If you go the route of becoming self employed, there are many tax advantages you can use to lower your taxable income.
You can write off things you buy as business expenses.
If you earn enough income to have a profit at the end of the year, you can put money into a Roth IRA or other retirement account.
And if you work from home, you could take a home office deduction.
#13. Make Building Wealth Easier
Many people struggle to save money.
When you have multiple streams of income, you make it easier to save money.
And you can potentially save a lot of money.
If you make it point to save and invest most of this money, you are going to be building wealth very quickly, thanks to compound interest.
- Read now: Find out how to save like a millionaire
In a few years, you will be amazed at how much farther ahead financially you are than if you weren’t bringing in this extra money.
There are many reasons to have multiple streams of income.
I highlighted 13 of the best ones.
I encourage you to take some time and see what is out there.
Don’t limit yourself to a traditional part time job working retail or fast food.
There are many other ways you can earn extra money, many from home or even online.
You never know when one of these will turn into a reliable income stream that can change your financial situation for the better.