How to Create Multiple Streams of Income

Savvy investors understand the need to diversify their investments to reduce risk. But it can be just as important to diversify your income source to mitigate career risk.

If you're rooted in a job, it's understandable that you might want to keep doing more of it. However, placing all of your eggs in one basket can be risky. You could lose an important client, or a recession might bring challenges that you aren't financially or professionally equipped to handle.

Everyone, including entrepreneurs and employees, should consider developing multiple streams of income for themselves. Having income from various sources can help you hedge the risks of layoffs, economic downturns, and unexpected expenses.

 

Factors to Consider before Getting Started

If you work for a company, keep in mind that many organizations have rules that limit or completely restrict employees from working other jobs. Be certain to check with your employer's guidelines regarding side work and be certain to get anything you do approved before adding a new revenue source to your plate.

In addition to prioritizing your full-time job, you also need to be careful that you aren't poaching clients from your current employer or breaking any rules the company has set when it comes to outside work.

Once you get the ok, but before you start beating the bushes for new income streams, take time to consider what’s feasible and ethical for your situation. For example, if you’re employed full-time, there are limitations to how much extra time you'll have to pursue outside work while juggling personal and family time. Figure out how much time you can allot to additional income pursuits, so that you can plan accordingly.

To be successful in diversifying income, you will have to carve out time to focus on those new pursuits. If you decide to pursue a secondary income, you need to find a way to make time consistently to work on something to create a revenue stream outside your day job.

Working on a side job isn't for everybody, but it may be a good strategy if it’s feasible. Not only is it smart to have extra income, but no job is failsafe and you may find yourself in a position where you need extra funds unexpectedly.

Master One Revenue Stream Before Tackling Others

Before pursing various opportunities, make sure you have created a solid foundational skill that you can always draw upon, and fall back on if needed.

Unless you're extremely well-known in your field already, you're not likely to earn a large income from speaking engagements or similar work. However, as you gradually build expertise in one field, you may be able to add speaking engagements or other income streams that draw on that expertise. Building the foundation for future income can be rewarding in the long term.

More Income Streams Means More Responsibility

While generating income from various sources sounds great, it’s important to plan carefully before haphazardly adding new business ventures to your repertoire. So, it can be wise to only add one or two income streams at once. That way, you can give attention to your new ventures and avoid becoming overwhelmed.

Before you get started, consult with a financial planner or banker to help create a financial plan for you, said Mary Helmich, personal banking strategy manager for City National Bank. There are often startup costs that could require an investment, even if it's just to create marketing materials.

Additionally, it’s best to develop a plan for how the new income you earn will be utilized. "Once you start earning extra income, don't just see it as money for discretionary spending," Helmich says. "You should invest that money in something that will generate future income for you."

 

Six Places to Look for Multiple Streams of Income

If you’re interested in earning money from multiple sources and diversifying your career risk, these six options are just a few ideas to get you started.

1. Consult with Clients

For many professionals, the easiest starting point for additional income is to share your expertise by offering consulting or coaching services.

This can be a great idea because there are frequently few barriers to entry, or large startup costs. It might only require a computer and a website to start generating opportunities.

For example, if you own a bed-and-breakfast, you might consider developing and marketing a training course for people who would also like to open such an establishment.

However, the skills you share don't have to be related to your day job. Many people teach skills that are related to a hobby or personal passion. You could be a project manager by day and teach people about photography on the side, for instance.

2. Author a Book or Start a Blog

Revenue from book sales is another common income stream for consultants and business owners. Many nonfiction authors prefer to wait until they have comfortably established a writing style, have a social media following, and a firm idea of the theme and goals for a book before jumping into that medium. But even if you're not ready to write a book, you could consider starting a blog.

While a blog or a video blog may not generate much money at first, it can be an important way to attract potential consulting clients and to start building your personal brand, which can help you lay the foundation for an eventual book deal.

3. Start a Podcast

A podcast can operate like an audio blog with your personal insights on a topic, or it can become a platform to interview other experts in your field and make connections. Most podcasts need to have around 10,000 downloads per episode to attract a sponsor. But even if you don't reach that sizeable audience, a podcast can raise your profile and increase your brand recognition, helping you attract new clients and possible public speaking opportunities.

4. Speak Professionally

Public speaking can be very lucrative for well-known speakers, but most people aren't well-paid at first. However, as you build your brand, public speaking can become more lucrative.

If you've started a blog or are writing a book, these things can help you generate demand — and better pay — for public speaking gigs. Again, if you're employed, check with your organization to determine what their guidelines are for speaking engagements.

5. Host Live Events

You can also make extra income by organizing professional how-to workshops for small groups of people, or conferences for hundreds, depending on your field and your ability.

Some professionals have found success by facilitating mastermind groups, which are peer-to-peer mentoring groups that bring people together to discuss their ideas and offer each other support. The participants pay a fee to the facilitator that adds an income stream to their other employment.

6. Invest in Real Estate

When you've earned enough income to reinvest it, a common source of cash flow to supplement your income now and in retirement is to own one or more rental properties. If you plan to relocate from your current home, consider keeping it and using it as a rental property rather than selling it. Or if you have the resources, buy another property to be used as a rental.

To develop multiple revenue streams, you’ll need to think creatively about what you can do and think practically about turning your skills and passions into money-making opportunities. If you're interested in exploring new sources of income, start by finding a mentor who can help you identify opportunities in your field. That person's success may help guide you toward the same positive outcome.