3 Ways You Should Be Diversifying Your Income

by Alexa Mason · 16 comments

Diversifying your income, or adding multiple income streams, is a great way to protect yourself in a down economy. If you lose one source of income, you can simply turn to another to get you through hard times.

My quest to diversify my income has gone beyond the financial protection aspect — I actually enjoy it. I’ve experimented with several income producing methods: everything from working two day jobs to freelancing to building my own products.

But I’ve never found that one thing that just hooks me. So, I continue to experiment. And because of this, I’ve now built up multiple (albeit small) income streams from activities I enjoy.

If you’re looking to build multiple streams of income, but don’t know where to start, let me break it down for you. Here are three sources of income anyone can obtain:

3 Must-Have Income Streams

1. Your Day Job

Source number one is your day job. This is something you picked by 1) getting a degree or 2) applying for, so I’m hoping you’re happy with it. Your day job is going to be your most stable form of income (at least in the beginning), so you should definitely keep it.

Try paying all of your expenses with your day job income, so you can put sources number two and three to work for you.

2. Your Side Hustle

My favorite source of income is the side hustle. You control what you do, how much work you put in, and to some degree, your level of success.

Here are the requisites for picking a side hustle:

  • You enjoy it (a must!)
  • You’re good at it
  • You can make money with it

Remember: This is a mini business you’re creating in your free time. You absolutely must enjoy doing this — or it won’t work out.

Unfortunately, it would take several posts for me to cover the ins and outs of getting your side hustle up and running. But take it from me: The hardest part is getting started. Once you start, everything else will come naturally.

And just in case you’re stumped for ideas, here are a few:

  • Walking dogs
  • Babysitting
  • Reselling items on Amazon, eBay, etc.
  • Painting houses
  • Freelance writing
  • Consulting
  • Teaching or tutoring

Keep in mind that what you enjoy doing and what I enjoy doing are different. Research and experiment until you find a profitable side hustle.

3. Your Passive Income Pursuits

The almighty passive income is what most people strive for. According to Wikipedia, passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of “unearned income.”

Your passive income could come from investing in the stock market, owning rental properties, or selling digital products.

Not all of these income streams are as passive as they seem, however. Let’s look at real estate. If you find a positive cash flow rental property, you’re still going to have to find tenants, deal with them, and handle maintenance and repair issues. Or, you could hire a property management company to do this for you, thereby making this a bit more passive.

How diversified are you? These three sources of income can be achieved by anybody. Hard work and determination will be required — but the earlier you get started, the sooner you’ll be able to enjoy the rewards.

How many sources of income do you have?

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{ read the comments below or add one }

  • JJ says:

    I was reading the part about having a “side hustle”, and laughing. There’s so many impossibilities with that.
    1) Nobody in the town where I live wants to pay anybody to walk their dog, and even if they did, the tiny amount they’d want to pay wouldn’t be worth it. They are all cheapskates, as I’ve learned the hard way by attempting to have a yard sale.
    I love to baby-sit and I’m good with kids, but because of this covid pandemic, people seldom farm out their children now. Reselling on Amazon/eBay? No clue how to go about it. I’ve tried my hand at writing and it was a miserable failure. It fizzled big time. The rest? Well, we’re in the midst of a pandemic. What can I say but “social distancing”? Anything else you can suggest? I can use some ideas.

    • David@MoneyNing.com says:

      You should try googling how to sell on eBay. There are tons of articles on how to go about it. In fact, I bet eBay has a section that helps you how to put up listings and sell. It’s not that hard. If you are in need of cash, at least you will get some from selling your old stuff in the house.

      I know that not many people would need babysitting services right now, but this situation won’t be permanent. Hang in there. There’s definitely light at the end of the tunnel!

  • Chelsea_Gerrard says:

    I starting freelancing writing for added income and it is certainly the most amazing things( both for earning and experience). I think even if we try cutting cost, we still cannot save much! Saving money is never that easy and nothing is better than generating income. I completely agree with this post. Thank you so much for sharing insight 🙂

    • David Ning says:

      You’re right Chelsea. You can only go so far with saving money. After that, the best way to build wealth is to increase income.

  • Alex @ Credit Card Xpo says:

    I have 1 passive income from rental properties and so far it’s working pretty well for me. I do manage them myself so it’s not 100% passive but I enjoy doing it.

    • David Ning says:

      I envy you because you actually enjoy this. I hear rental income could be great but I know I won’t enjoy the day-to-day so I’ll have to stick with the volatility of equities!

      • Alex @ Credit Card Xpo says:

        David, I also envy you if equities work for you. I have tried it but didn’t like the volatility of it.

        • David Ning says:

          The volatility can be quite upsetting but you just need to have faith in a growing population and capitalism prevailing in our country!

  • Syed says:

    Making income on the side is so important especially if your day job doesn’t give you a huge potential to make more money. It’s also imperative to keep your expenses low, because you never know you might want to put more effort to grow your side hustle which might make you less money initially. Great post.

    • David Ning says:

      That’s what I did Syed. If my expenses weren’t low, I would have never had the guts to make the leap to give my side hustle (this site) a shot. 5+ years later and I can say that branching out on my own is one of the best decisions I’ve ever made in my life.

  • Brian @ Debt Discipline says:

    I have my day job, but trying to expand to a side hustle and beyond.

  • Jon @ Money Smart Guides says:

    I have my main job as well as a bunch of side hustles that bring in some extra income. I’ve also gotten into rental real estate and enjoy it. I want to expand that income as well as my investment income in the coming years.

    • David Ning says:

      Good for you Jon. I’ve always wondered about rentals but I just don’t want the potential hassle. I’ll stick with investing in securities for now and continue to watch from the sidelines.

  • G says:

    I do teach painting 1x weekly on Saturdays. The problem I have with this is time gets taken up with the planning etc, that it tires me. I have to plan, get the ad out, and get the checks etc. I feel overwhelmed on the administrative side that I just dread it these days. However I love painting and it is a good income if I put more effort (promotion etc). How do I combat that?

    • David Ning says:

      Do you teach out of your home or is it part of a school? I ask because perhaps you can streamline the payment portion so it’s easier for you. As for the planning part, can you simplify things by reusing part of your plans?

      Could you also ask your friend to help the admin side and pay him/her a portion of your take?

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