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?