“I am very happy with my salary and I don’t think I need a raise,” said no one ever. Most people usually find ourselves thinking that the income we earn through our jobs or business is not enough. The bottom line is that no matter what we earn, we’d like to earn more. Even if it is to take an extra vacation, save for the future or pay off debts. That is why many people today are setting up more than one source of income by making the most of several easily-available avenues.
What are the additional income sources?
As the name suggests, additional income sources are usually the money that we earn over and above our regular income. The additional income is earned by pursuing an extra job, vocation, or through some investments that become a source of income like rent from leasing out your house. So, remember the year-end bonus doesn’t count as additional income.
History is full of people who took more than one job to maintain multiple sources of income during hard times. People like Samuel Walton (the founder of Walmart) took up several additional jobs, like delivering milk and selling newspapers to help him earn a few extra bucks before he made it big with his business. There are numerous examples like Walton, who held multiple jobs to take care of their needs at the time of struggle.
Having more than one source of income doesn’t simply mean more money to spend right now; it also means better utilization of the extra capital. Here are some benefits you can enjoy by diversifying your source of income:
- Achieve financial goals quickly
Everyone is usually saving up small sums of money regularly to fund a big future dream. It could be buying a house, saving for higher education for self or children or some leisure holiday, etc. Having an alternate source will help enough for the future and achieve long-term goals faster. An alternate source of income also helps in planning the finances for future targets in a more organized manner.
- Reduce reliance on a single income
In today’s uncertain job market, when there is reduced job security and layoffs are a common phenomenon, many people’s jobs are at risk. In this context, having more than one source of money reduces the threat of severe personal financial crisis that is usually associated with people losing their jobs. This would not only cut down the risks involved in case of job loss but also take care of the financial needs in case of an untoward incident.
An alternate source of income acts as a protection against the unprecedented instances that might lead to disturbances. Thus, an alternate source of income ensures a consistent flow of money, helping to combat the circumstances leading to fluctuating supply of income.
- Build a larger fund for retirement quickly
There is no doubt that having a smart retirement fund is critical in today’s world to help you make the most of your life after leaving the workforce. An alternate source of income would create more funds at disposal and will help in building a large fund for retirement. It would also help a person to reach the retirement goal earlier than expected. Similarly, if your additional source of income is rental income, you can continue earning it even after retiring from your job.
- Reduce chances of incurring debt
People usually take credit or debt when they are short of money. They might turn to banks for secured loans, use their credit cards, or borrow instant personal loans. However, creating an alternate source of income will reduce the regular incurring of debt and the higher rate of interest that usually come with them. What’s more, if you establish alternate sources of income today, they can help in paying off an existing debt faster and help you become debt-free.
- Create a corpus for future needs
Having an alternate source of income can help you save a higher corpus for your contingency fund. An alternative income would lead to additional income, which can be used to invest or save, keeping in mind the future. This can also help to take care of those financial expenses that are regular in their occurrences like festivals, celebrations, holidays, etc. If possible, receive the extra money that you earn in a different account, so that you aren’t tempted to spend it. Similarly, build your contingency fund separately to help you track its growth.
- Pursue aspirations
An additional source of income can give greater freedom to pursue your dreams. If you know that quitting your primary job will not wreck your finances completely, you are more likely to pursue projects and jobs that might initially require higher investment of time without a significant financial return. An alternate source of income also increases the risk-taking capability and gives more liberty to start your own business. The extra income source would take care that expenses are taken care of, and bills are paid until the venture takes off and becomes operational.
Common sources of additional income
In the age of the digital revolution, it is easy to start with simple and effortless ways to create an additional source of income. Some of the most popular ways which give a decent monetary return are listed below:
- Start a Blog
Blogging has emerged as one of the most popular trends in the last two decades. One can recover the initial investment quickly and earn from it as well. However, making your blog a success requires patience and hard work. In other words, if your job doesn’t leave you with any time or energy, this might not be the best option for you. Furthermore, you should learn a few basics on how to set up a blog and how to write as well. Eventually, as you write more, you can set up Google Ads and accept affiliate partners for marketing as well.
- Take paid surveys
Paid surveys have become the easiest way to make quick money. One of the most significant benefits of earning money through surveys is that it does not require a dedicated time but can be taken during free time and does not have any deadlines to be met. There are several apps where you can sign up for answering survey questions, testing websites and apps, or even watching ads to earn small sums of money. While a lot of these platforms and apps offer vouchers and coupons, some offer direct cash as well. Be sure to check the authenticity and reliability before you register.
- Start a home business
If you have expertise in a niche domain and can market yourself well, then you can start a home business. It can be started with a low investment and has a huge potential of making money. Teaching, cooking, bakery, sports training, or investment guidance – the options are endless. You can start small with just a few clients or customers, and eventually work your way to expand your base and even focus on it full-time if things go well.
How to set up additional sources of income: Things to remember
While setting up additional sources of income is naturally a big benefit, not everyone is successful in doing so. Here’s what you should keep in mind to avoid the common pitfalls:
- Capitalize on your strength
To set up another source of income, the most important is to identify your potential. You must be good at the business or industry you want to enter, or at least have someone to guide you through the process of setting it up. Once the end-goal is set, the next step is to look for opportunities that could be freelancing or can start up independently.
- Make an initial investment
No matter what you choose to do, you will have to put in some basic sum of money to get started. Your success of failure will depend on how well you are able to use this initial seed amount and multiply it. You can consider taking a short-term personal loan for this as well.
- Be patient
Success does not come overnight. If you are starting a blog or a new business with the expectation that you will be earning enough to quit your job by the end of the month, you are bound to be disappointed. Have short-term and long-term goals, keep a check on your progress, and have flexibility in your plans.
An alternative source of income is a necessity in today’s time to live a fulfilling life. While we all dream of earning more money, it is not a cakewalk for everyone. People usually lack the motivation or drive to go beyond their primary job, but once you move past that, things tend to become easier.
Eventually, an additional source of income not only provides higher disposable capital, but also helps secure finances, investment, and the future. There are multiple ways to set up additional sources of income today; simply remember to set realistic goals, be disciplined, and work hard.
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