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With a new year underway I have been thinking a lot about the need to diversify my income streams. While my near-term ability to continue full-time working status remains good, I’ve become heavily dependent on my full-time job for income.
Not all of that is my fault.
I can thank declining savings and dividend rates for knocking down a good bit of my monthly interest income.
Some of my failure at diversifying our income streams has been my fault. I haven’t had the proper motivation at finding a side hustle until just recently.
Maybe it’s the market’s recent volatility that has me nervous, or perhaps just my own overly-conservative nature.
Whatever it is, it has motivated me to begin thinking about new ways of diversifying your income streams in the coming year.
4 Realistic Ideas for Diversifying Your Income Streams
1. Dividends. With yields on most savings accounts still well under 1% an annual dividend return of 4-5% looks awfully attractive. I might just add to my dividend ladder, which is missing several rungs, to generate some monthly dividend return.
Of course, there is some risk of losing capital inherent in investing in the stock market, but there are plenty of opportunities for a relatively safe dividend return in utilities, telecommunications, and other other sectors.
2. Savings. I know savings rates are hovering below 1%, but there is a place in every portfolio for cash. From emergency funds to sinking funds you should have plenty of cash put back.
I need to diversify my cash into various interest-bearing products, such as CDs and money market accounts, rather than letting it just sit in savings earning next to nothing.
3. Rental income. This may be one of my favorite ways to diversify income, but it is also one of the most difficult (at least it is for me). I’m generally risk averse, so I cannot fathom the idea of taking on another mortgage, even a small one for a rental property. I also don’t have enough cash floating around to pay cash for an investment property.
Still, I know that rental income has the potential to provide more than any other category in the long run. I really need to get serious about this before mortgage rates go back up.
4. A side hustle. Besides this blog, I maintain a couple other web properties where I try to eek out some additional income each month. It’s hard to do, and requires a huge time investment, something I’m also short on these days.
I could look at part time employment, but the thought of standing on my feet after a full day of work bagging groceries or delivering pizzas is not appealing. I recently began driving for Uber, which helps add several hundred dollars a month to the household ledger.
None of these income streams are going to make me wealthy alone, but together each serves as sort of a safety net for the other. Having four or five income streams in addition to your full-time job makes you more layoff-proof, and able to withstand periods of temporary unemployment.