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9/22/07

The Advantages of Multiple Sources of Income

The advantages on having more than one source of income seem obvious. More than one source of income means more money. However, the advantages of multiple income sources are more than just more money.

First, multiple income sources diversifies your risk. If one income source is cut-off or fails, there is still one or maybe more that is unaffected by the failure of the first (assuming the income sources come from different markets). For example, let us say that you are a computer programmer and that you have some investments in real estate, specifically, real estate rentals. If you stop receiving a paycheck from your computer programming job, your income from your real estate rentals will most likely be unaffected. The additional source of income creates a “safety net” so that money is still coming in the door.

Another advantage of multiple income sources is efficiency of work. In other words, you can make more money per hour while doing the same amount of work. For example, if you were to get a second job, you would be making more money and you would have another source of income, however, you would not be working efficiently. On the other hand, if you had stock investments that pay dividends, real estate investments that pay a rental income, a website with advertising income, etc. you would be making more money per hour for doing the same amount of work, and thus, be more efficient.

Last, and probably most importantly, having an additional income source can give you free time and peace of mind. Having free time is great, but having free time to worry about your finances is like slow torture. The point of free time is to spend it doing the thing you love. Nobody loves worrying about money, therefore, the peace of mind that an additional income source can provide is an extremely important element.

The advantages of an additional income source are many, however, do not work harder for it, work smarter and success will be within your grasp.


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