So you want to put a little more money in your pocket every month? What you have to do is diversify your income. After all, that stimulus cheque can only last you so long.
The goal to diversify your income and create multiple income streams should maximize your potential in each category available to you. If you just started earning income, it really isn’t reasonable to expect you to generate tons of rental income. However, if you start maximizing your income-generating potential through your primary salary, you will find yourself having excess income that you can reinvest to generate additional income streams and become a millionaire.
In this article, I’ll cover tons of practical ways to diversify your income. These ideas include ways to make money online, offer specialized services like consulting and freelancing, and even invest your money, so it grows passively over time.
The best part is: You can start implementing many of these ideas as soon as you’re done reading.
What Does It Mean to Diversify Income?
To diversify your income means adding multiple streams of revenue to supplement your current job. A diversified income has more than one source. It’s a way of earning more money even while holding down a full-time job. Whether you are early in your career, are thinking about leaving a full-time job to start your own business, or are nearing retirement, there are plenty of ways to diversify your income.
The idea of diversifying your income by creating multiple income streams and successfully competing in all these areas, and becoming a millionaire is a task reserved only for a select few. Are you one of them?
Benefits of Diversifying Your Income
As the old saying goes, don’t put all your eggs in one basket. Diversifying your income can help provide stability and hedge against income loss due to layoffs, illness, disability, discrimination, and more. Also, having multiple streams of income can greatly impact your ability to build wealth and/or fund retirement.
Diversifying your income provides you with a stronger personal safety net if you’re fired or hit with another emergency. Plus, with diversification comes business experimentation. And you never know where that could lead you.
At the risk of sounding too obvious, having multiple income streams also improves your earning potential. Maybe your employer won’t give you a raise for another year—but a side hustle can give you another way to earn more money before your boss feels generous.
While I don’t believe in get-rich-quick schemes, I believe that most people have more money-making opportunities around them than they realize. And no, I’m not going to give you the generic advice you see everywhere, like donating plasma, attending focus groups, or doing online surveys for fifty cents an hour.
Let’s jump in.
Ways to Diversify Your Income and Become a Millionaire
There are several ways to diversify your income. While some are for consumers who have a strong savings account, others are suited for those who live paycheck-to-paycheck. Here are six ideas to diversify your income and add more to your bottom line.
Start With Your Day Job Salary
We talk a lot about “side hustling” and multiple income streams, but let’s face it, your day job is, most likely, your number one source of income. In fact, I think everyone starts this way (if you didn’t, I’d love to hear your story!). This is what most likely pays your bills and keeps food on the table. The goal is to maximize your day job salary to a point where you generate enough free cash flow to reinvest in secondary income streams.
For me, I’d consider my “day job” my freelance income. Even though I’m self-employed, I view certain income streams like paying my bills and others are goal money or fun money.
But for others, your day job might be a true nine to five. Regardless, there are several ways that you can boost your income stream with your day job. Can you pick up shifts at work? Volunteer for overtime? Or, even asking for a raise can boost your day job income.
Either way, the great thing about your primary salary is that you can usually get benefits, such as health insurance, that really protect you while you are pursuing your other ideas!
Invest In Real Estate
Real estate investing can be an effective way to diversify your income. This method is best if you have a considerable amount of capital built up to cover buying a home with cash or paying an extra mortgage payment.
You may not make a large profit right away on rental properties, but you’re acquiring an asset that can yield generous returns in the long run. Rental properties can also position you to make larger investments that require collateral in the future.
The problem with rental property is that the initial capital outlay is required to get started. Most people starting to diversify their income streams don’t have a 20% down payment to purchase an income property. That is why this is usually done later in life, almost like an advanced multiple income stream topic.
However, there are ways to do this earlier, such as getting started with real estate crowdfunding. With real estate crowdfunding, you can become a limited owner in real estate for a smaller amount of money. It’s a great way to get started investing in real estate.
Here are just a handful of ways to make money through real estate:
- Long-term hold: Purchase a home in an appreciating real estate market. Live in that home for 7+ years. Eventually, sell the home, pay off the remaining mortgage, and enjoy the appreciated earnings (or invest in another house).
- House flipping: Buy a house that’s below market value. Fix any damages that may keep you from selling the house. Sell the property for more than you paid for it.
- Become a landlord: Buy a house. Lease out a portion or the entirety of the home to a tenant. Rake in the monthly cash. If you do the upfront work to find reliable tenants who respect your property and pay rent on time, then being a landlord can be a great way to earn passive income. If you’re curious to learn more about this, Google “house hacking” and have fun.
Sell a Product
Create a digital or physical product to sell. I know friends who build custom furniture and sell it locally using the Facebook marketplace. You can also build an online eCommerce store on a site and promote your products for free.
With that said, here are some ideas:
- Write an eBook: Anyone can become an author on Amazon. In fact, I tried this a few years ago. All you have to do is write your eBook in a word doc, format for Kindle, and upload it to Amazon’s Kindle Direct Publishing program. The process is simple. However, making sales and getting your book to rank high is a ton of work.
- Sell Stock Photos: There are so many places that you can sell stock photos for royalties. If you’re a photographer, this could be an excellent side gig for you. Just a couple of places to sell your photos are 123rf.com and freedigitalphotos.net.
- Create T-Shirts: Do you ever see ads on Facebook for T-Shirts that have your name or occupation on them? Those ads are usually from people who create the T-Shirt and then advertise to you through Facebook. If you end up buying one of those T-Shirts, the creator will earn royalty.
Try Gig Work
You can also do gig work. This includes running errands, helping people move, delivering food, and other simple services. Here’s where to start:
- Uber or Lyft: Use your car to taxi strangers to their destinations
- Ubereats, Favor, GrubHub, DoorDash, Instacart, Postmates: Deliver food directly to people’s houses or work
- Fiverr, TaskRabbit, Handy, Care.com, or Thumbtack: Provide local on-demand, contract-based services (depending on your interest and skill set) like general contracting, house cleaning, yard work, babysitting, assisting the elderly, etc.
Invest In the Stock Market
A mostly passive option to diversifying your income is investing in the stock market.
Just like anything, investing does take a little upfront capital to get started. However, you can build a dividend portfolio and start seeing rewards right away. But the power of compound interest is a huge force, and you’ll soon see your income stream grow!
Drawbacks of Income Diversification
One of the few constants in life is that there are only 24 hours in a day. If you take on a part-time job, such as being a ride-share or food-delivery driver, to diversify your income, you will have less free time for other things. It also doesn’t pay to diversify your income if the effort costs you your full-time job, and you need that salary to survive. Make sure the added demands of your part-time job or other passive business activities don’t negatively affect your job performance or endanger your health.
If you have the resources to invest in real estate or become a silent partner in a business but not the expertise or time to research prospects, consult a professional advisor to get started to avoid placing yourself in financial peril.
Become a Millionaire
The point is that you can diversify your income in various ways. You can basically choose one of each from the categories above, and create a much-diversified income portfolio and become a millionaire in no time.
The other point is that it is pretty easy to get started. You don’t need to be super rich, and you don’t need a lot of time to get started. To say it requires no time would be a lie, but you don’t need to make anything listed above your life. You can work at your job, invest your excess income, save to buy a rental property, or rent out a room in your current house, and you start a side job online without breaking a sweat.
Think like the experts say a millionaire would as you look for ways to diversify your earnings away from a single source or employer
The reward from these activities will be financial freedom!