We all know that talking about money can be tough. In fact, even if you feel secure about your financial situation and future, you most likely still feel the stress and pressure that comes with balancing your checkbook. No matter which career path you choose, understanding how your income and spending affects your every day life is neccessary.
While some professionals may think in a singular form – one job plus one salary equals one money source – this lack of diversification may cause headaches in the future. Whether you choose to add an additional form of income by picking up another job, looking into passive income sources or even building your savings through investments, there are multiple ways for you to make money.
If you’re considering an additional revenue stream to your daily life, you will be moving in the direction of a secure financial future. Here is why it’s essential to have multiple income sources, no matter which job you have.
Nothing is Guaranteed
When you focus on obtaining your income from one singular source, you are placing a large amount of trust in the unknown. The hard truth is that even though you may have a steady job at this moment, nothing is ever completely guaranteed.
People lose their jobs, companies fail and the market crashes – these are some of the misfortunes of life. Recognizing that you may find yourself in a less than desirable situation will allow you to start planning for the unexpected. Even though you are happy and satisfied with your cushion of a paycheck, it’s important to stay realistic about the future of your career.
Since nothing in life is truly guaranteed, starting to think about an additional income stream will allow you to build a back up plan if your career path suddenly veers off course.
You Can Start an Emergency Fund
While picking up an additional income stream can be used to soften the unpredictable changes in your career, you can also use this opportunity to start planning for changes in your every day life. Another reason to accumulate additional income is for the use of an emergency fund.
It is a well known fact that many individuals are lacking in the savings department. In fact, many professionals live paycheck to paycheck without ever putting a percentage of their income away. By building an additional income source, you can use this extra money as a backup for emergency occurrences.
In this case emergencies aren’t related to losing your job or having to change careers. Emergencies are for every day life occurrences that are unexpected such as medical bills, having to service your car, household issues, lending money to family or friends in need or having an essential item break such as your work computer or gear for your creative profession.
By having an additional income source, you can place all of this money directly into an emergency fund without having to use your salary for such expenses.
The Ability to Invest in Experiences
Another important reason you should build an extra income source is to have the ability to enjoy your life. While we may have this perception that work trumps all, we need to remember that life should be experienced to the fullest extent.
If you are already saving for your future, have a back up emergency fund and are able to pay all of your bills on time, additional income can be used to invest in experiences. How many times have you wished you saved enough money to travel? Or put some more money into your social life – trying new restaurants, attending cultural events and society gatherings?
We often get into the cycle of non-stop work that leaves little room for true living. By creating a way to make more money, you can allocate these funds towards the enjoyment of your life. Even if your gain is small, an extra $200-300 per month could pay for a weekend getaway or trade nights in for social hangouts in your city. Although money can’t technically buy happiness, it can fund life experiences of travel, culture and social immersion.
You Can Save for the Future
Depending on your specific career, you may already be building a solid base for your future and retirement. While salaried employees have the ability to set up such funds for the betterment of their future, other professionals may need to plan and start these accounts on their own.
If you are in the freelance field or self-employed, it is your responsibility to set aside savings for your retirement fund. By setting up a side hustle or passive income generator, you can start to put money into a fund that will be strictly used for the future. Just think, if you put $500 away per month, that’s already $6000 per year dedicated to your post working life.
Removing the Financial Stress and Pressure
If all of these reasons haven’t convinced you yet, just think about the alleviation of financial stress and pressure having multiple income sources can offer. Chances are that even if you make good money and feel secure in your finances, you still think about what could happen if it all disappeared.
While having an additional source of income isn’t the end all solution to financial security, it’s a great first step to building a more sound fiscal future. By combining the practice of balancing your finances, keeping your expenses intact and saving for the unknown future – the intersection of your current income and extra revenue streams can allow for positive changes in your daily life and experiences.
If you are currently working in a salaried position or as a freelance, self employed individual starting an extra income stream is an achievable task. If you’re serious about the stability of your future and experiences, it is essential to start building your own additional revenue opportunities.