Mitigating the Risks of Relying on a Single Income Source

It is good to have a steady source of income but it is equally risky to rely on only one source of income. I discussed the risks associated with this in another article where I wrote about the dangers of relying on a single income source.

The key to mitigating the risks associated with relying on a single income source is to diversify and build multiple income streams. There are important reasons you should diversify.

Why you should have multiple income streams

Aside the obvious benefit of mitigating the risks of relying on a single income source, an important reason you should have multiple income streams is because there is no rule that says you can only have one income stream. Many of us have been conditioned to see and accept having a single income stream as the norm without questioning. We consider having a 9-5 job, selling a product, offering a service or running a business as all there is to earn money.

Not only that, it is good to be able to earn money but it is even better still to achieve financial independence. To have financial independence means to be in a position where you do not have to work in order to earn money and have your financial needs met satisfactorily. Having multiple income streams increases your capacity to build wealth and achieve financial independence. This is an important reason why there is no wealthy person who has only one income source, not one.

How to build multiple income streams

Oftentimes, the problem people have is not that they don’t know they need additional sources of income. The challenge is not knowing how to go about making it happen.

You probably are already aware it is important to have additional/ multiple sources of income. It is possible that you have made numerous attempts in the past to build multiple income streams but unsuccessfully. As such the solution is not just about coming up with ideas to generate additional income but coming up with and implementing the kind of ideas that are most suited to your situation.

A few things to consider when building multiple income streams

1. Passive income

Prioritize passive income over active income. Work on building streams of income that don’t rely on your daily effort. The mistake people often make is to wrongly construe multiple income streams to mean multiple jobs. While it is true that you may have to start generating additional income by taking on a second job in order to earn active income, realistically you can only do this for a limited period of time.

Aside that, your personal circumstances or time constraints may make it difficult to take on a second job or to sustain it for long without creating additional problems for you such as adverse disruptions to family life, injury to health and emotional drainage.

Examples of passive income include rental income from properties or storage facilities, dividends, interest from savings, commission from affiliate marketing, royalties, and income from digital content such as YouTube videos, online courses, stock photos, and selling an app.

2. Evaluate what you have

Consider starting with what you already have rather than what you don’t have. Evaluate and identify what expertise, talent, skill, unique experience, or specialized knowledge that you already have that you can leverage to offer tangible benefits that someone somewhere in the world is willing to pay for.

You can offer your assets by teaching, training, consultancy, coaching, speaking, entertainment, education, creating or distributing a product etc. or helping other people to procure items they struggle to get on their own. Create your own products e.g. digital products like ebooks, Create products to sell, digital products like app, eBooks, art, music

3. Sell

Selling is one of the quickest and most readily available opportunities available to make additional income. The critical question therefore is to ask yourself: what can I sell? Look around you and look online, what goods, services or information do people need that you have or you can get that you can sell?

The kind of things you can sell:

• Products that people need but can’t readily find.
• Products that are in high demand or that will be in demand. The kind of products that people are already buying in high demand. There is no point reinventing the wheel if the wheel is not broken.
• Products that are cheaper or more readily available in certain locations or seasons than in other locations or seasons
• Products people need or they are bound to need – indispensable to their daily lives. Products that have consistent demand e.g. food, products related to fitness, mental health, and nutrition, Smart devices, accessories, and tools for convenience remain trending categories. Evergreen: Products that sell year-round (e.g., clothing, electronics, personal care items).
• Products you can get at cheaper or discounted prices and resell at higher prices.

4. Market for other people

You can make additional income by leveraging your time, network and online platforms to promote, distribute or sell for other businesses and earn commission through affiliate marketing.

5. Create Portfolio Investments

Invest in income generating portfolio. Invest in assets like real estate to generate rental income, stocks and shares and businesses.

 

Thank you for stopping by. I’m Ayo Adebamowo. Author, Speaker and Tech Entrepreneur. I’m here to walk your success journey with you. Subscribe to my newsletter for regular nuggets or check out other empowering articles on my blog to help in that journey. My latest book is Make Money, a primer on launching and growing a profitable business.