The Dangers of Relying on a Single Source of Income

You have a good job fetching you a good and steady income. You have probably had the same job for years and your role in your workplace or industry is pretty much secure. So, why then should you bother about diversifying and having additional income sources?

Life’s Uncertainties

Life is full uncertainties and unpredictabilities. As they say, life happens. There are events that happen that are simply outside of your control.

You can lose your job for instance, owing to absolutely no fault of yours. You can find yourself in an unexpected situation where you are willing but unable to work. Organisational restructuring, business downturn, economic recession, sudden changes in government policy, protracted litigation, health challenges, migration, divorce, changes in personal circumstances and other unforeseen circumstances can precipitate an unexpected loss of job or disruption to business.

If your income depends on only one job or a single business, you will be exposed and subject to risks that are beyond your control such as industry-specific downturns, company restructuring or layoffs, market fluctuations and changing consumer preferences

Disruptions to your sole income can have adversarial impact.

1. Financial Difficulties

Relying on a single income source makes you vulnerable to financial difficulties. A disruption to your source of income can trigger immediate financial challenges making it difficult for you to pay for your essential expenses like rent or mortgage, healthcare, utilities and bills in general.

2. Inability to Save

Having only one source of income makes it harder for you to build a safety net. Your chances of dipping into savings or not being able to save at all are higher when you are relying on a single income source particularly when you lack financial discipline or have substantial needs. Without additional income streams, you are more likely to struggle to build enough savings for emergencies and unexpected expenses. As a result, you won’t have a financial cushion to cope with economic downturns or personal setbacks.

3. Increased Debt

Relying on a single income source increases your chances of resorting to loans, bank overdraft and other forms of debts for consumption. It is easier for people with multiple income sources to avoid relying on debts than it is for people with a sole source of income.

4. Increased Stress

Relying on a sole income source can trigger anxiety about job security or business performance. You are more likely to be pressured to overwork or accept unfavourable working terms in an attempt to keep your job or maintain your income at all cost. This kind of stress can affect your mental health. When you have money issues, you are likely to think and worry about money all the time. By contrast, when you have money or assets you can readily monetize on demand, you tend to feel more psychologically at ease.

5. Limited Ability to Utilize Life Changing Opportunities

Relying on a single source of income limits your ability to save for long-term goals like buying or building a house, retirement, education or investments. With little or no savings, you are less likely to be able to take advantage of investment opportunities that could grow your wealth over time. Not having enough money limits your ability to fulfill your life goals and pursue philanthropic ventures to help others.

 

Thank you for stopping by today! 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.