An Important (Real Life) Example of How to Diversify Your Income

Today I want to talk about income diversification. It's been a hot topic around here lately since my post on how I'm saving 40% of my income went live on Learnvest, and then another post I wrote about increasing my income 60% appeared on The Huffington Post. The two go hand-in-hand, and I wanted to piece it all together for you today.

  • I am able to save 40% of my income because I earn enough to save 40%.
  • I am able to save more money because I have multiple streams of income.
  • Having multiple streams of income is called income diversification.

Everyone always wants to earn more. Right? Duh. Money makes the world go round. I'm not being braggy, that's just the way it is. Saving is not without sacrifices, but it was really impossible to save even half of a percentage of my salary a year ago, before I started really freelancing and took on a new, better paying, job. But I didn't truly learn the importance of having different ways of earning money until I was unexpectedly laid off on Valentine's Day of this year.

I wasn't out of work for long, but having freelancing and tenant income to fall back on (and at least some semblance of an emergency fund…) kept me from having a meltdown.

How to Diversify Your Income

Here is what my income looks like right now. (You know I get turned on by a good Excel pie chart.)

June Income

 

Having income outside of my 9-5 pay also makes it easier for me to save, since I don't factor that money into my monthly budget.Β Β I made money from my freelancing, renting a room in my house, selling old furniture/things I didn't want on ebay, and my regular job.

Ideally, I'd like my freelance income to be a bigger portion of this (UPDATE: It did!), and add blogging/affiliate advertising revenue back into the mix. I'm not going to worry about it though, unless the pie chart starts looking like this.

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june income bad

See how #1 is preferable? So, for all of you income diversification newbies out there, don't get bogged down in the numbers. Just try to visualize making your pie chart a little bit healthier. See how many different slices you can carve out.

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Where should all of this extra money come from?

We've covered in great detail ways to make extra income, including a post about finding “side hustles” off of Craigslist, and starting your own side hustle.

When it comes to income diversification, every little bit helps. So it doesn't matter if you fix up junk cars, run an Etsy store, or babysit, the whole point is to not to completely on one main source of income. Try it out and see!

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I didn't truly learn the importance of diversifying my income until I was unexpectedly laid off. Here's how to diversify your income and live a wealthier life.

 

 

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  • Tre
    August 15, 2014 at 4:24 pm

    I’ve been thinking about income diversification a lot lately. It really is important. Love the charts!

    • Lauren Bowling
      August 19, 2014 at 10:19 am

      Thanks Tre! I’m no fancy graphic designer, I make all my charts in Excel since I am photoshop challenged πŸ™‚

  • Lisa E. @ Lisa vs. the Loans
    August 11, 2014 at 6:20 pm

    Ahh, I love a great Excel pie chart. Income diversification is something I need to work on!

    • Lauren Bowling
      August 12, 2014 at 10:17 am

      Putting it into excel really visualizes it for me which helps keep me motivated.

  • Kate @ Money Propeller
    August 10, 2014 at 7:07 am

    You’re really proficient in diversify your income! And honestly, I’m not really good when it comes to that.

    • Lauren Bowling
      August 12, 2014 at 10:15 am

      I wasn’t either until I had a horribly low paying job and needed to find a way to fund the renovation of my house. Necessity is the mother of invention!

  • Michelle
    August 8, 2014 at 8:40 pm

    I love seeing all of the different streams of income coming in. I hate having one primary source of income, it’s a very scary feeling. The more I diversify my income, the more at ease I become with life in general.

    • Lauren Bowling
      August 12, 2014 at 10:14 am

      But you have a “side hustle” as well, so you shouldn’t so afraid!

  • Jayson @ Monster Piggy Bank
    August 6, 2014 at 8:28 am

    Having wide source of income is in nowadays. It’s pressuring me to make money and to diversify my income from freelancing and doing entrepreneur jobs because it’s like a bandwagon. 12% for the writing income is not that bad! feeling adventurous and challenged.

    • Lauren Bowling
      August 6, 2014 at 9:16 am

      I think after the recession people saw the need for additional revenue streams due to the instability of the economy. Good luck!

  • Charlotte
    August 5, 2014 at 6:22 pm

    I need to work on diversifying my income…right now, almost all of my money comes from my 9-5 and a small amount comes from investment returns. I should really look into some sort of side hustle to even it out a little bit!

    • Lauren Bowling
      August 6, 2014 at 9:15 am

      A side hustle can come from the most unexpected places. Do you have a hobby you could monetize? Or something you already do for free that is ripe for monetization? I have a friend who loves clothes and works at a retail store on the weekends, just to afford her shopping habit. Not exactly ideal, but it is, technically, income diversification. Doesn’t matter how you spend it!

  • Anne @ Money Propeller
    August 5, 2014 at 5:16 pm

    Even a little bit of income from other sources can be awesome, like you said when you are laid off, having at least something offsetting your costs is HUGE.
    I’m working on growing those chunks of my pie, too! Best of luck!

    • Lauren Bowling
      August 6, 2014 at 9:14 am

      Thanks! And thank you for catching the code error yesterday.

  • Roadmap2Retire
    August 5, 2014 at 1:11 pm

    Congrats, LBMT. Income diversification is so important in case of the unthinkable happens, i.e., lose ones job. I wrote a similar post last month πŸ™‚

    Your blog is new to me and im glad to have stumbled across your blog. I will be adding it to my reading list.

    cheers
    R2R

    • Lauren Bowling
      August 6, 2014 at 9:13 am

      Thanks. I will add your blog as well.

  • Retired by 40
    August 5, 2014 at 11:57 am

    That’s pretty diverse, not gonna lie. We’re not super diverse, but it’s something that I’m working on every day πŸ™‚

    • Lauren Bowling
      August 6, 2014 at 9:12 am

      Thank you! Although the furniture consignment was kind of a one off thing.

  • Money Beagle
    August 5, 2014 at 11:40 am

    That’s great. The more income streams you have, the less risk of financial disaster in the event one suddenly goes away.

    • Lauren Bowling
      August 6, 2014 at 9:11 am

      Absolutely. Even if they’re small, it is worth it to have something to fall back on.

  • Michelle
    August 5, 2014 at 10:00 am

    I think you are doing well! You seem to be very diversified. I’m not as diversified as I once was. Almost all of my income comes from online freelancing.

    • Lauren Bowling
      August 6, 2014 at 9:11 am

      Yeah, but you do have a LOT of it, right? You should be ok in case something shifts. πŸ™‚ You and Wes should do a rental property.

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