The Great Recession delivered a wake-up call for many employees, the self-employed, and those living from the passive income of investments. They recognized how quickly they could go from financial security to insolvency. All they had to do was lose a job, a few clients or customers, or the value of the assets in their portfolio. In her 2013 book Down the Up Escalator, money expert Barbara Garson chronicles those horror stories. One solution for preventing another personal finance disaster is to develop multiple sources of income. Instead of being totally dependent on one full-time job, for example, those who multi-stream income create a variety of other ways to make money. With a global economy continually disrupted by technology, this approach could become the new normal. Here are four steps for making this shift.
The First Step
The first step is to improve the security of the main source of income. If that’s serving three major clients in a consulting business, monitor what more can be done or done differently. Never should the quest for additional income endanger that. Unlike what will be tried, that represents a known. It’s a proven source of revenue.
The Second Step
The second step is to investigate how existing experience, skills, resources, and contacts can be transformed into money-making possibilities. The options include:
- Searching for a full-time job after a time of self-employment, part-time work, or temping. A changing economy means demand’s always changing. Those shut out a few years ago, such as truckers, could now be in short supply. The mistake is to rule out returning to full-time work in a field that had been hit hard during the downturn. If hired, the objective should be to retain as many current income-producing situations as possible. For example, the former truckers might have been painting houses, cleaning basements, and working part-time at a moving firm. They should push to have that re-scheduled around their new hours.
- Adding on freelance, part-time, and temp opportunities. Technology and global time zones make it possible to work full time and do plenty on the side. That ranges from developing apps for a smartphone to teaching English as a Second Language from a home office in New Haven, Connecticut, to students in China. Online sites such as craigslist provide free worldwide help-wanted ads for all kinds of situations. In addition, most industries have specialized free global listings, such as Journalismjobs.com and mediabistro.com for writers.
- Socking away more in financial investments. Having multiple sources of income can free up funds to put in accounts such as retirement, which employers contribute to.
- Investing in tangible assets. A common example is rental property. All that’s needed is the money. For a fee, management companies will take care of the rest.
The Third Step
The third step is to explore acquiring new skills. In this Do-It-Yourself (DIY) era, ambitious people are re-inventing themselves through free or low-cost training online or through books at the public library. Where there’s already an aptitude, the learning comes easily.
The part-time copywriter can develop comprehensive expertise in search-engine optimization (SEO). That could lead to owning and operating a side business in SEO, with contract employees doing the actual assignments. The full-time web developer can learn to code, doing temp assignments evenings and weekends. The dog walker can pick up the fundamentals of training, gaining experience and references through doing the service free.
The Fourth Step
The fourth step is to continually evaluate which initiatives are the most profitable. According to the Pareto Principle, 80% of outcomes, including revenue, come from 20% of inputs. Applied to business, that means that smart managers will focus primarily on the 80% of the tasks, clients, or customers that yield the most results.
Over time, it could turn out that buying up rentals is more lucrative than working full-time as a teller in a bank. The freelance coding is where the most profit is coming with the least hours worked and the least stress. Therefore, the coder might look for a full-time job doing that or create a startup for that business. The dog walker might invest in advertising the more lucrative training part of the business.
Few human beings welcome change. Yet, establishing multiple sources of income can open up fresh, lucrative options. Next would come the decisions about which one or ones to make priorities and which to treat as additives. In the wings could be major career shifts. Those could represent an awesome payoff on the initiative and courage to reach beyond traditional approaches to build financial security.