Having all of your income come from one source can make it easy to manage money, but it can also be risky. For example, what if you lose your job, or an emergency happens beyond what your financial confidence account can handle?
Brian Ford, financial well-being executive at SunTrust Bank, discusses the benefits of diversifying your revenue streams so that all of your proverbial eggs aren’t in one basket.
What does it mean to diversify your revenue?
Diversifying your income means having income from several places, as opposed to just one. In most cases this means getting another job, whether part time, freelance or in your spare time. While this is helpful for growing your savings and reaching your goals, it also reduces your overall risk. For example, if you only have one source of income and it were to stop, that can be a scary situation to be in. But if you have multiple streams of revenue or income coming in, and one were to fail, then you certainly could rely on the others. It just puts you on better footing, and no doubt you’d be much more financially confident having multiple streams of income versus just one.
What are some of the benefits of having multiple sources of income?
It’s not just about reducing risk—there are real tangible financial benefits, including just being in a better place financially. It’s easier to build wealth and move in the right direction financially when you have more income coming in. It provides the ability to get ahead faster.
Challenge: Invest your energy in your current job. Even if you do have time to look for another job or a side hustle, it’s important not to neglect your main source of income. Balance is key, and maintaining your current relationship with your employer should never be taken for granted.
Then there’s more of the emotional, psychological side, which gives you peace of mind. If you’re maintaining several income streams and one or two of them were to go away, you have the added confidence from the additional sources. And any time you have peace and confidence within yourself, you are moving in the right direction.
Challenge: Don’t have time for another gig? Aim to make yourself the next person promoted at your current job. Spreading yourself too thin can prevent you from spending enough time with those you care about, as well as preventing you from being a valuable employee at your primary job.
How do one’s values or passions play a role in diversifying income?
What do you care about? Can you monetize that? Can you make it into a business? Can you create an additional source of income? You don’t have to. Your passion will always be a part of your life. But if there’s an opportunity to make money, and you enjoy doing that and it doesn’t limit your ability to do your current job, then why not?
I mean, we talk about win-wins. It’s like a win-win-win-win-win. Whether you want to teach dance lessons or play some musical gigs on the weekends, putting your passions to use is an amazing thing. Talk about being financially confident! When your income is coming from multiple sources and your values are incorporated into the mix, you are doing what you love, and that’s a good place to be.
- Multiple revenue streams protect you so that if one fails, you can rely on others.
- If you do have time for a side hustle, don't neglect your main source of income.
- Use your values to create additional sources to move closer to financial confidence.
