One of the best things I ever did for myself and my financial future was focus on diversifying my income in my 20s. From starting this blog, to investing in real estate and house flipping, to freelance writing on top of my 9-5 and more, having those income streams has helped me to navigate potential financial catastrophes in my 30s: things like divorce, an unexpected layoff, and becoming a single mom. Learning how to create multiple streams of income in your 20s can be a great way to secure your financial future. In this blog post, I will provide you with a step-by-step guide on how to do just that.
How to Create Multiple Streams of Income in Your 20s
First, you have to start small. I'm guessing most people already have a full-time job. That's income stream #1. Then, you work on a second income stream. Perhaps building a side business, or leveraging one of the side hustles mentioned below.
From there you can add income streams as time, money, and bandwidth allows. The important thing is to diversify your income, even if it's just a little bit. This way, you'll never be solely reliant on just one income. Below is a step-by-step on how to identify and strategically create your next income stream.
1. Identify your skills and interests
Start by making a list of your skills, hobbies, and interests. This will help you determine what kind of income streams you can create. For example, if you're good at writing, you could consider freelance writing or starting a blog.
2. Research potential income streams
Once you have identified your skills and interests, research different income streams that align with them. This could include starting an online business, investing in stocks, or even renting out a room on Airbnb.
3. Set clear goals
It's important to set clear goals for each income stream you want to create. This will help you stay focused and motivated. For example, if you want to start a blog, set a goal of publishing three blog posts per week. In any income stream, no matter what it is – consistency is key. And remember – all income streams that are passive begin as active ones. Everything takes work, there isn't any “get rich quick” blueprint…ever.
4. Develop a plan
Once you have set your goals, develop a plan to achieve them. Break down each income stream into smaller tasks and create a timeline for completing them. This will make the process more manageable and less overwhelming. For years (pre-kids, but still) I used to religiously set aside every Sunday evening from 4-8 p.m. to work on my blog and freelance writing assignments for clients. Having this dedicated time made juggling both freelance work/blogging and my 9-5 more manageable.
5. Take action
Now that you have a plan in place, it's time to take action. Start working on each income stream one by one, following your plan and staying consistent. Remember, success doesn't happen overnight, so be patient and persistent. I used to create my weekly to-do list for work, and for life (like groceries, errands, etc.), and then have a dedicated space in my planner where I would do three things each day (outside of my four-hour chunk on Sundays) that made progress on my other income streams. They were small tasks too!
6. Diversify your income streams
Have you heard that statistic that every millionaire has an average of seven income streams? As you start generating income from one stream, consider diversifying by adding more streams. This will help you minimize risk and increase your overall income potential. For example, if you're making money from your blog, you could also explore affiliate marketing or creating an online course.
7. Continuously learn and adapt
The key to creating multiple streams of income is to continuously learn and adapt. Stay updated with the latest trends and technologies in your chosen income streams. This will help you stay ahead of the competition and maximize your earning potential.
8. Monitor and optimize
Once you have multiple income streams in place, it's important to monitor their performance and optimize them for better results. Keep track of your earnings, expenses, and any changes in the market. This will help you make informed decisions and improve your overall financial situation. And please keep records for your accountant. Speaking from experience, having multiple income streams is nice, but it does not make tax time any easier.
How to Create Multiple Streams of Income in Your 20s: Most Common Income Streams
Obviously, if you want to create multiple income streams in your 20s, you’re going to have to work. But the work is well worth the effort, I promise. What follows is a primer on the most common types of side income streams. (And I'm sure there are some that I missed!)
- The side hustle/side gig – something you do very casually on the side (usually on top of a 9-5 job)
- A side business (or side businesses) that you work on consistently and grow over time
- Passive income
- Investing (if you invest outside of saving in a retirement account)
- Rental Income
- Full-Time Salary (and the secondary salary if you are married and your spouse works!)
So, for example, when I was working full-time and my ex-husband and I were both renting our houses, we had seven different streams of income between the jobs, the houses, and my blog and freelance writing hustles.
It was a lot of work managing it all, but we were able to fully pay for our wedding (with no debt) and buy the home of our dreams. So as you can see, multiple streams of income not only provide financial security but can help you reach your financial goals faster.
#1 – The Side Hustle / Side Gig
I think of side hustles and side businesses a little bit differently.
I see the side business as something more involved than a “gig” (like driving for Lyft or something). A gig is a small-time thing; you do it when you want, in your free time, and aren’t actively trying to grow the income. The side gig will always be your side gig.
You have no intention of ever turning a side gig into your “Main bae.”
A blog or a freelance writing hustle also makes a great endeavor for your free time if you enjoy writing. The best thing is, now more than ever there are SO MANY gigs you can do from the comfort of your own home.
#2 – The Side Business
Have a passion you’d like to turn into a thriving side business for extra cash? I’m a big believer that everyone has a “side hustle” in their back pocket – they just don’t know it yet.
The basic steps to building a side business are as follows:
- Determine what your business will be
- Start by selling that product/service to your circle
- Deliver exceptionally
- Build a marketing presence for your business
- Grow. Profit. Repeat
That’s the high-level overview, but I go into more detail in my post, The Ultimate Guide to Starting a Hustle.
#3 – Passive Income
Some people don’t want to actively manage a business. They want to make money in their sleep, on autopilot, stack coins while on vacation, or rest easy at night after a full day of work knowing they’re still making that chedd-ah.
Passive income is the holy grail of income streams.
Meaning…they’re difficult to set up and get going, but once you do it’s relatively low-cost from a time perspective. Technically, investing and real estate income are also considered more “passive” income streams, but I wanted to go into more detail so they get their own sections. Aside from investing and real estate, some of the best types of passive income include:
- Peer-to-Peer Lending
- Selling digital products like courses and ebooks
- E-commerce/Drop Shipping Business
#4 – Your House/Leveraging Existing Assets
An easy way to add an income stream to your budget is by leveraging existing assets you already have (like renting out a spare bedroom in your house) or items that you don't use all the time. There are multiple apps now that make it easy to access marketplaces of renters looking for exactly what you have to offer.
My favorite is if you have a large home or an apartment with a spare bedroom. This is probably the easiest way on this list (even easier than a side hustle) to start earning additional revenue on top of your 9-5 job.
#5 – Investing
I’m not an investing expert, and I’m not going to try to be in this article. Instead, I’ll just say that there are investing opportunities beyond what you’re already doing for retirement.
Whaaaa? Yes, it’s true!
You can invest your regular money. And because it’s growing in the market over time, that’s passive income. I’ve linked some resources that explain this far better than I can below.
- How to Start Making Passive Income
- Investopedia's 4 Best Passive Income Investments
- Ranking the Best Passive Income Investments
#6 – Rental Property/Real Estate
Renting out a room in your home isn’t quite the same as having a rental property or flipping houses. When we say rental property, we mean a home (or condo, or apartment, or townhome…etc.) that is different than your primary residence. While there is some time involved in finding a tenant, maintaining the property, and turning it over in between long-term tenants, this is one of the easiest streams of income I’ve ever had to maintain.
When I became a landlord, there were a few additional resources I used to “lighten the load.” Below are my favorites and sanity-savers:
Multiple Streams of Income: Rental Property Reads
- The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Smart Buy & Hold Real Estate Investing – by Brandon Turner from Bigger Pockets – Anyone completely new to this whole landlord thing should take a read of this great book.
- The Bigger Pockets online community is also a GOLD MINE of information for those who want to landlord – either full-time or as a side business.
- Every Landlord's Legal Guide – I don't want to make it sound super-easy. I mean, it can be, but being a landlord is not something you can just breeze through. There are so many legalities involved, you must absolutely read up on the tenant's legal rights, and yours too.
Cozy.co – (Now it's the Apartments.com rental manager) Back when I was a landlord, this app is the MVP of my landlord-ing line-up. Transunion also has a nice rental manager called SmartMove. They also don't charge you for any payments made through the app and rather tenants applying for the property pay for their own background/credit checks. If you only have 1-2 properties, I think this makes things a lot easier!
Investable- Maybe you don't want to be an “Accidental Landlord” and would rather be a bonafide real estate mogul. This super brand new tool from my friend Andrew at Listen Money Matters helps you run all the math-y numbers in an easy-to-use app.
This way, you can see if a certain property you want to buy (or, your actual home)/rental properties would make a good real estate investment and how much you'd need to charge in order to turn a profit. I know many people, myself included, struggle with the “how much to charge” question. There's a 14-day free trial, so I recommend checking it out and playing around.
#7 – Full-Time Job/Salary Income
Not everyone is going to be an internet entrepreneur (nor wants to be.) Some people, myself included, find so much satisfaction in corporate employment and a job outside the home. Most people work some type of W2 job, so I wanted to include ways to increase income in this area as well.
Because if you’ve got a salaried job, this is your first income stream. So, let’s make it as strong as we can.
If your paycheck is feeling a little light, try the tips below to boost your earnings and make more money at your day job. (Here's a great post from the Muse on 8 Ways to Ask for a Raise.) And here's how I made a total career shift without going back to graduate school .
Make no mistake, making more money at your W2 job (likely your biggest source of income) is the easiest way to increase your income. It may not always be feasible, and it may not be where your passions lie, but if you want to boost how much you make… start by looking at how to earn more at your full-time job.
How to Get a Raise
Asking for a raise can be intimidating and uncomfortable, but don't let that stop you. Just remember that timing is crucial. You should consider these points first:
- Are you really going above and beyond in your current role and getting good feedback from your manager?
- Do you have examples of difficult projects you've handled and customers you've made happy?
- How is your company performing financially? Do you see co-workers getting promotions, or is the company in a period of transition?
The last time I asked for a raise, I put a dollar value to every project I’d worked on. I did a lot of research and asked friends who sent a lot of the work I was doing to agencies how much they spent. This helped me quantify – in exact detail – how much money I saved the company…and let me tell you, it went well beyond what they were paying me.
Knowing what you're worth is crucial when applying for jobs AND asking for a raise, and Payscale is one type of website that helps you do this (there are other options like LinkedIn, GlassDoor, etc.) It ensures you and the company are in sync with compensation expectations and also helps ensure you ask for as much as you can get.
This will help ensure your paycheck goes far enough to make you feel valued, pay your bills, and meet all of your financial goals.
Find a New Job (If Necessary)
Research finds the biggest increase in earnings occur when you switch jobs. If you're happy, try and make it work at your current employer.
If you really would like to earn more, consider hunting for a new job and negotiating for a higher salary upon entry.
Sure, you can just Google to see what jobs are available near you. But there is no guarantee that those sites will actually have something for you; you'll need to check out some of the best job sites in the business.
The Real Reason Multiple Income Streams are So Important
Maybe you’re skeptical. Maybe you don’t think multiple income streams are for you because you’re already so busy, or like having lots of free time.
But here’s the reason why I like multiple income streams, and why I work so hard to build and maintain them.
There’s power in having a diversified income.
Having multiple streams of income will empower you to make all kinds of “risky” choices. It allows you the freedom to follow your heart, your gut, and your conscience when need be.
And even if they never become more than just “money-making hobbies”, having side streams of income gives you options. Things to fall back on.
- You’ll be devastated if you unexpectedly lose your job, but you won’t be down and out.
- You’ll sacrifice free time upfront, but end up with more, later on, to chase down the things that truly matter.
- We no longer have to be full-time corporate slaves. We can be full (or part-time!) masters of our own destiny.
And all of that sounds pretty darn good to me.
*This post appeared in September 2015. It was updated in March 2019. Ann Arceo and Kevyn Bowling helped contribute to this piece.
Lauren Bowling is the creator of Financial Best Life. Writing about money since 2012 (formerly as L Bee and the Money Tree), Bowling is an award-winning blogger and money and real estate expert whose advice has been featured on CNBC, Forbes, CNNMoney, Elite Daily, Business Insider, Redbook, and Woman’s Day Magazine and more. After selling the site to a division of The Motley Fool in 2019, Bowling is now back as the owner and primary voice behind FBL and is excited to continue educating elder millennials everywhere about how to afford their best life.