Increase Your Financial Security with Multiple Streams of Income

Posted On 12 March 2021

Last updated on April 9th, 2024

Having multiple streams of income is something that is commonly talked about, but how can the concept be applied in real life? A single source of income is simple. It keeps income taxes simple.

The hazard of having a single source of income is best told with a story. It is a true story from my life, and yes, I have made so many mistakes it is not funny.

Over a decade ago I had a route sales job. It was quite a demanding job with some long days. Since it was a delivery job I was on my own most of the time without my boss watching over me. I worked hard and treated the route as if it was my own business. Now, it was not my route, I was paid by the hour, and the boss owned all the equipment that was used.

I had the job for almost two years when the government contacted my boss about payroll taxes. The boss thought I was a contractor when I was actually an employee. As a result, I was fired immediately.

At this time my wife was not working and we had three young children. When our only source of income was abruptly cut off, we struggled financially. It was not a fun time!

I tell you this story not so you can feel sorry for me, but to tell you that my wife and I have been in the position of having a single source of income. It is fine as long as everything goes as planned. When problems arise and things stop working (or we stop working!) life gets tough.

Security Through Diversity

As J. Paul Getty said, “I’d rather have 1% of the effort of 100 men than 100% of my own effort.” While we are probably not going to have 100 sources of income personally, we should heed Getty’s advice and establish several income streams for ourselves.

When we have multiple sources of income, we add financial security and stability to our lives. Financial storms can unexpectedly come along and we will be better able to weather those storms if we have multiple streams of income.

Another lesson I learned from J. Paul Getty is that the best time to make changes is when things are going well. During these good times we can take our time to make changes that are the best. If we wait until things get tight, we might make changes that are not the best.

Learn and Grow

In order for us to add multiple sources of income to our lives, we must keep learning. As we learn to do more things, we find ourselves capable of doing more things! These skills then can give us more confidence.

The skills that we gain from doing different things gives us the experience and knowledge to do more things. This can be job, side-hustle, DIY, or investing related. I include DIY in the list because we can learn to do things so we don’t have to pay someone to do them for us.

We can also use these different income activities to help us reduce our income taxes. Please be responsible and research what can be legitimate deductions. I previously wrote about Learning the rules of the money (and tax) game. While no one enjoys paying taxes it is something that we must do, and we must and play by the rules.

Streams of Income

Now, these streams of income can be from one source, such as individual customers for the self-employed. While a person can boost their income with a second (or third) job, if that other job is in the same industry as the primary job there is less security with that setup.

For example, let’s say a person is working as server at two different restaurants. If there is something like a pandemic that forces restaurants to close, they lose both streams of income at the same time.

While pandemics are rare, if that person breaks a bone they would be out of work at both places. Still, two income streams are better than one! I would add that a couple who works in different industries is better off than those who both work in the same industry.

Types of Income

There are different sources of income a person can have, such as a second job, side hustle, self-employment, stock ownership, or real estate. The advantage of having different types of income is that it is very rare that all the different types of income would be negatively affected at the same time.

Robert Kiyosaki (the author of Rich Dad, Poor Dad) discusses four different types of income in his book Cashflow Quadrant. The four quadrants in his book are Employee, Self-employed, Business owner, & Investor. Kiyosaki makes a point to separate the self-employed from the business owner. The thing that differentiates the two is that the self-employed person owns their job, while the business owner has a system in place that allows the business to run whether the owner is there or not. I enjoyed reading his books.

There are many, many ways that a person can add income streams to their life. An interesting way that people can make some supplemental income is with online surveys. Check out Bella Wanana’s post on Opinion Outpost if you would like to learn more about getting paid for your opinions.

If a person searches, they can find ways to add another income stream. I would only recommend adding one stream at a time to make sure that you are not overextending yourself. Also, you’ll never know if you like doing something until you try it.

Having multiple sources of income is not just something that I talk about. It is something that I practice as well. In addition to running Canoosa Finance, I am a self-employed handyman. I am continually learning new things and learning about other ways to make money such and Forex trading, cryptocurrencies, and the stock market.

Keep learning and you will be surprised at what you can do!