Remember that little talk we all have as kids when we’re told to not put all our eggs in one basket? It’s amazing how many people don’t follow this advice when it comes to their income. Your job is never fully secure. The economy could collapse tomorrow and you could have problems meeting your financial obligations.
There are people who don’t have to worry about this. This is because they diversify their incomes. Not only do they make sure they’re protected against potential layoffs, but they’re also earning more money than the average person.
Let’s take a look at five ways to diversify your income.
The Side Hustle
Use those spare hours you would usually use watching television and do some work on the side. There are many ways you can do this. Some people will babysit the children of their friends and neighbors. Others may have more elaborate side hustles. For example, former business owners may continue to work with some of their former clients for a couple of hours every day.
Start a Business
Just because you’ve started a business doesn’t mean you need to go at it full-time. Most businesses can exist on a few hours of good work every day. What you do is entirely up to you, but make sure you can manage it with the time you have.
A lot of people find their businesses evolve out of their successful side hustles. You never know, your new business may even lead to a full-time job one day.
Invest Your Money
There are a number of low-risk funds you can invest in with any money you can save up. Make sure you speak to a financial manager with a strong reputation for success whenever you decide to invest any of your money. Ideally, you should make sure this money can be managed passively or by a professional; assuming you can afford to invest in a financial manager.
Never try to control anything other than low-risk investments if you don’t have the appropriate financial knowledge.
Real estate has always been a popular venue for those who want to earn some good money. The downside is real estate requires a little more management and there’s a higher risk. To start with, consider if you know anyone else who may want to go into real estate with you. This usually requires a reasonably large sum of money to get started in, so it’s useful to have someone else working alongside you.
There are a number of ways you can make this work. You can:
- Buy to rent.
- Buy to sell on.
- Buy to refurbish.
Again, make sure you consult a financial manager and give this option some thought first. It does have its risks and it is possible to lose out on real estate if you don’t know what you’re doing.
Certain types of home equity loans are specifically meant for retirees. If you are of retirement age you can take advantage of such a loan, known as either a home equity conversion mortgage (HECM) or a reverse mortgage. A HECM will convert part of your home’s equity into cash. You can then use the cash you will receive for bill payments and other living expenses, or for anything else you desire. Obtaining a reverse mortgage can, for example, help you to pay for a dream vacation during your retirement without adding to your financial concerns. The full reverse mortgage balance will only become due immediately if you no longer live in the home on a full-time basis.
A Second Job
Finally, if you have the time the second job may be the option for you. A part-time job on the side can offer you the chance to do something different with your day. It’s also a good way to add something new to your list of useful skills. If you want to add customer service skills to your list, a stint in a coffee shop is a great way to do this.
Understandably, this isn’t for everyone.
Before you diversify your income, make sure you have thought about the pros and cons of each option. We can’t stress enough how important it is to really think about your options before committing to anything. When done well, a diversified income can transform your family’s financial future.