One of the myths that still persists in society is that a good job is the key to financial security. Even after the recent recession, and even though the job market remains tough, the belief that a good job with a decent salary will provide financial freedom remains widespread.
The reality, though, is that relying too heavily on your day job for most of your income can be financial suicide in the long-term. In fact, relying too heavily on any one source of income can be deadly in terms of building long-term wealth and achieving financial freedom. Instead of relying on a single source of income, you need to invest in income diversity if you want true financial security.
One Source of Income = Greater Risk
No matter what your source of income is, there is a big risk when you rely too heavily on a single source. Many people think that a “good job” is the path to stability, but the reality is that your employer can lay you off at any time.
The same is true if you rely too heavily on certain stocks in your portfolio for your retirement income.
What happens when there is a huge market crash just as you need the money?
If you want to avoid the risks that come with relying on a single source of income, it’s vital that you cultivate income diversity. Think of ways that you can invest in yourself, and in other assets to create multiple streams of income.
When you have income from various sources, you are more likely to survive a financial setback. If one source of revenue is reduced, you still have other income streams to draw on. This is the path to true financial freedom and wealth that you can rely on, now and in retirement.
Sources of Income Diversity
Consider how you might diversify your income right now, and in the future.
Here are some things to keep in mind as you invest in various revenue streams:
- Assets: Part of income diversity includes paying attention to the assets you are investing in. While stocks can be a great source of wealth over time, you also need to consider other assets that can provide income, including real estate, and commodities. These assets often move differently to stocks, and can provide you with income even when stocks falter.
- Business: Start your own business. Even if you have a day job, you can start a small business on the side. Technology makes it easy to start e-commerce stores, monetize a web site, provide freelancing and consulting services, and engage in other types of businesses. Invest in your own side hustle, and you could have alternative income to support you over time.
- Royalties: Create something that provides you with royalties. Consider your talents and expertise. Write a book, develop a course, or record music. You might enjoy your effort, and it can be a source of recurring income.
Look at your current income situation. Where is it vulnerable? Look for ways to diversify your income so that you aren’t relying on a single source, or a single asset class. The more diversity you have in your income, the safer you’ll be, no matter the circumstances.
If you are really serious about creating multiple streams of income, it is critical that you first invest in yourself by obtaining the proper education. See how Elevation Income can help jumpstart your new business with this course.