You’ve Heard of Job Security, But What About Income Security?

by Miranda Marquit · 5 comments

Job security. Despite recent improvements in the employment situation, this remains an issue of concern for many Americans.

According to a recent COUNTRY Financial Security Index survey, 68 percent of consumers think their job security is likely to be the same or worse in 2014. COUNTRY points out that this contrasts with the view of Wall Street economists, who think job security is likely to increase as the unemployment rate drops to 6.3 percent by the end of 2014.

Are You Worried About Your Job?

If the financial crisis and recession taught consumers anything, it’s that your job isn’t as secure as you would like. Layoffs can happen to almost anyone. And, even if you’re not laid off, your hours could be cut significantly, or you could face a furlough. These are situations that result in lower earnings from your job. With many Americans concerned about job security, reduced hours, and unpaid leaves, it is little wonder that there’s a divergence between Wall Street and Main Street.

If you’re worried about your job, it makes sense to do what you can to prepare yourself and your finances for the possibilities of a layoff or hours reduction.

How to Improve Your Income Security

Even if you think your job is secure, now is the time to improve your income security. It’s important to separate the idea of your job from your income. If your day job is your only source of income — especially if you’re not building up an emergency fund — you could be in trouble down the road.

If you lost your job, or if your hours were cut, what would you do? Do you have another source of income to fall back on?

Alternate sources of income can include:

  • Emergency fund
  • Investment account (including income investments like dividend stocks and P2P lending income)
  • Rental property income
  • Side business income (including freelancing and web site revenue)
  • Royalties from a creative endeavor
  • Part-time job held by your partner

Relying entirely on your job can put your finances at risk in a big way. What you need, instead, is income diversity. When you have other sources of income, it’s not as big of a deal when your day job runs into problems. You can use your investment account, or other income sources, to help you through the tough times.

If you aren’t sure about your job security, now is a good time to start looking for other sources of income. Consider setting aside more of your paycheck for emergency savings, or starting an income portfolio. Think about getting a side gig, or seeing if it’s feasible for your partner to start working part-time or start a home business.

Many of us have learned that what the “experts” see happening on Wall Street doesn’t necessarily translate into solid gains for those of us on Main Street. You need to look at your individual finances and take appropriate action to keep your income safe.

Have you considered income security before? What are you doing to ensure it?

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{ 5 comments… read them below or add one }

John S @ Frugal Rules February 11, 2014 at 5:36 am

I think the economic climate of the past few years has brought a number of people to seeing the need to work towards having that income diversity. We see it ourselves with our business, in wanting as many clients as we can handle, and in as many industries, so we could better weather any potential storm. But thankfully we have a healthy EF to use if it did truly hit the fan – not that we ever plan on using it though. :)

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property marbella February 11, 2014 at 7:56 am

Quite right, you should try to have multiple sources of income, I’m real estate agents full time and works as a freelancer with SEO for business websites, Both incomes can I live if I would lose one job.

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Donna February 13, 2014 at 8:02 am

Various income sources is definitely a need throughout your life….even in retirement. Social Security, pension, your own investments were the three legged stool. Now pensions and investments are evaporating due to corporate restructure and greed. Now even Social Security is in danger thanks to our politicians who are beholden to the rich more than their constituents. We need to be a nation of entrepreneurs more than employees as this danger increases. Then what will Wall Street do? I try to have multiple sources of income but I age frugality, which can be a source of income if you think about it, is more required to keep those other sources working. Like emergency funds. In retirement I have been use the web to create income. Maybe not much–but it helps to have that $50-$100 extra each month to pay bills or buy groceries. Social Security(widow) pays most of my fixed bills because I own my home and have no debts. But stuff happens. Medical bills, car repairs, etc. even taxes. The larger your RMD requirements are the more taxes you pay–even on Social Security. I figured it out. If I have a large IRA and do not need the money to live well. I still need to take money out and pay taxes on it. When I do that extra withdrawal almost exclusively can be the amount in taxes owed! So why did I save in the IRA. If I did not have to withdraw anything then I might not have to pay taxes or would pay less. It is looking more like I saved to pay taxes–not to enhance my retirement. So I am waiting until 70 as long as my health is good to collect my Social Security and living on my IRA now to reduce it. That way I am training my self to live on the amount I will get from Social Security later. That way my taxes will lower and my RMD I can reinvest in taxable stocks to grow after taxes paid of course. Then my chances of having an emergency fund and not running out of money to pay taxes will increase. Creating those multiple incomes takes some real thinking and talent…especially when retired.

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Online Carpets February 13, 2014 at 11:55 pm

It must be necessary for us to save our income becasue there is a lot persons who are roaming in our society due to which they were creating always problem for us !!

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Alex @ Credit Card XPO February 14, 2014 at 12:20 pm

Rental property income is a good one, I’ve been doing it for years, but you have to know how to fix little things like leaky faucet, flexibility to leave work at moments notice for emergencies, and etc.. it’s not for everyone for sure.

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