The other day I was in the car with my friend. I was telling her about how I’m graduating with my MBA soon and how happy that I am, and that I also have no clue what I will do with all of my extra time.
Ever since I was an undergraduate student, I have been working 8am to 5 pm, then going to class immediately after, 4 nights a week. This hasn’t left much time for anything extra in my life.
However, starting next week, I will gain around 30 hours of my time back. When I told my friend that I want to make extra money and do something on the side, she said “I don’t get it, don’t you make enough at your work? Why would you want to make extra money?” Yes, that was actually said by her!
I tried explaining why I would want extra income (as explained below) and she just could not grasp my reasoning. Having extra income and multiple income streams can be great for many reasons.
Why have multiple income streams?
1. To pay off debt faster.
With extra income, a person could apply more of their income towards their debt and wipe it all out months, if not years ahead of their original schedule.
Most of my debt (student loans, car payment and mortgage) is at a very low rate where I would/should be investing more. But I would also like my debt to be gone. Having multiple income streams would help me pay off my debt faster. My goal is to have my student loans gone by next year, my car payment gone by the beginning of 2013 and my mortgage gone by around 2016/2017.
2. To save and invest more.
Have multiple income streams would allow those to save and invest more as well. All of that extra income can be put into investments and grow.
Right now we are not investing as much as we’d like (around 15% of our after-tax income), but after we wipe out our debt and make more extra income, then we will of course be able to invest so much more.
3. To have other sources of income.
Not all jobs are 100% safe. The economy has created many layoffs, machines might eventually take your position, and so on. Diversifying your income just in case something happens is very important.
Yes, I know this will sound naive, but my job is pretty safe. Not many people do what my firm does, and we are always swamped with work from clients. I am not worried about losing my job, however, I do want other sources of income so that I can spend my money on the things that I want to (and not feel strapped by lack of cash). I also want to make my income more diversified.
4. To be efficient with my time.
If you have extra time, then why not make money from it? I’m not saying dedicate all of your time to making money, because that might not be the best work-life balance for you. But if you have the time, can find something that you can enjoy (or manage), then do it.
Yes, for the first couple of months (probably weeks), I will probably be extremely lazy with my time. I haven’t had a ton of time to relax, but sooner of later, I will want to be doing something worthwhile with my time instead of just sitting in front of my TV.
Why do you want multiple income streams?
This post was written by
Michelle is the founder of Making Sense of Cents, a personal finance and lifestyle blog about budgeting, traveling, life, and student loans. Read further on her story and life, and you can also connect with her on twitter.
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I like multiple income streams because things happen! Mostly things you cannot plan for such as my blog income going to nearly zero because Google changed their algorithm. I believe in it so strongly that I will have Social Security, pension, IRA, Roth IRA and a brokerage account to support my wife and I. In addition, I will have income from my blog.
I agree, things do happen, and multiple streams help me worry less.
I love the potential flexibility. My wife and I might be moving in a couple years and it’s nice knowing that I can have a side income while looking for a job in a new location – or even better, shift to working for myself full-time.
I agree, it would make the move go a lot smoother or would help you transition more smoothly.
I think the most important argument is multiple income streams allow us to accumulate wealth faster.
Very correct. Multiple incomes will allow us to accumulate wealth faster, pay off debt faster and potentially retire sooner.
I think that what you are getting at is that more income streams gives you more options. They give you flexibility in decision making. They open doors to opportunities. At least that is what I’ve found in working for additional income sources.
Yes multiple incomes give you more options and allow you to do more.
I’d like to the build multiple streams because I have multiple interests. Working only one job is just boring!
I’m with you. My multiple income stream ventures initially started out of boredom as well.
I definitely agree with you. We should always have multiple income streams and not rely in our day job alone. As a freelance writer and a virtual assistant, I see to it that I have three or four clients at a time. Just in case one client suddenly ends the contract, I still have at least two other clients and the stream of income continues to flow. Similarly, my husband, aside from his day job, also does face painting and graphics design projects during weekends. We started to have multiple income streams when we got neck-deep with our credit card debt. After paying off our CC debts and other loans, we put our revenue from these income streams for our savings, retirement, and other investment. It always pays to have other sources of income. Tell your friend to try and she will definitely not regret it.
I agree, it definitely pays to have other sources of income. That’s great that you always make sure to have other clients!