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.)
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. 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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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.
Where should all of this extra money come from?
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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