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Is it true that you need multiple streams of income?

Is it true that you need multiple streams of income?
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Having multiple streams of income means earning income from several different sources at the same time.

The tax-free ISA deadline is approaching!

If you’ve not made the most of this year’s ISA allowance of £20,000 you have until midnight on 5th April before the allowance resets.

A stocks and shares ISA could be a great tax-free way of investing for the future. To help you make a good choice, MyWalletHero’s experts have reviewed and ranked some of the UK’s top stocks and shares ISAs – compare them now.

Keep in mind that tax rules can change, and the value of any benefits depends on your personal circumstances.

If there’s one thing we’ve learnt during these uncertain times, it’s that very few jobs are actually safe. The rate of unemployment has risen and more people are being laid off or furloughed every day.

Simply put, it has never been more useful to have multiple streams of income. In fact, about 25% of Brits are now considering a second job to add a bit of security.

Why is having multiple streams of income important?

Imagine you only have one income source, perhaps a regular nine to five job. What would happen if you were to lose your job, or if your company was to go out of business? Most of us would either have to dip into our savings (if we have any in the first place) or take on debt to cover our expenses.

This is where having multiple streams of income comes in.

By diversifying your income, you are essentially placing a safety net under you and your family in the event of unforeseen circumstances. If one income stream were to suddenly dry up, you would still have money coming in from your other income sources to support you and your lifestyle.

Invest up to £20,000 tax free – before 6th April

Would-be investors could make a big tax saving by taking advantage of the annual ISA allowance before it resets. A stocks and shares ISA allows tax-free investments of up to £20,000 each year.

If you’re looking to learn more, MyWalletHero’s experts have reviewed and ranked some of the UK’s top ISA providers.

Keep in mind that tax rules can change, and the value of any benefits depends on your personal circumstances.

  • An opportunity to reach your financial goals and build wealth faster. Multiple sources of income can mean more money coming in at the same time, which can help you reach your financial goals and build wealth faster.
  • A chance to create and live your dream life. Whether it’s living in a house by the beach or travelling the world, the more streams of income you build, the greater the chances of being able to create your dream life.
  • An opportunity to hit early retirement goals. Many of us would love to retire early. Having multiple sources of income can help to make this dream a reality.

How many income streams are sufficient?

There is no magical number. Of course, the more income streams you can create, the better. The main thing is to have as many as you can without getting overwhelmed by the physical and mental commitment required for each.

Personally, three to five income streams is my sweet spot. For you, it could be fewer or it could be more. It all depends on your ability, preferences and goals.

How can you build multiple streams of income?

The options for building multiple sources of income are literally endless. Here are a few worth considering: 

  1. Invest in dividend-paying stocks. One great and simple way to create a regular passive income is to buy the stock and shares of companies that pay shareholders a percentage of their profits. This also comes with the added benefit of your stock increasing in value with time.
  2. Find an online gig. With just a computer and an internet connection, there’s a wide range of online jobs and side hustles you can do to earn some extra income. It could be anything from online tutoring to freelance writing or web design.
  3. Rent out unused or extra space on Airbnb. If you have extra space or room in your home sitting empty, why not convert it into an income stream by renting it out on Airbnb?
  4. Flip items for profit. If you have a good eye for a bargain, you could put your skills to great use by flipping items for profit on online market places such as eBay. 
  5. Driving for ride-hailing companies. Driving for ride-hailing companies like Uber is a great way to earn extra cash. Since you get to choose your own hours, you can do it, for example, after work or on your days off.

This list is not exhaustive. The bottom line is that when it comes to income diversification, you might need to explore and try a few different things to establish what works for you.

Final word

There’s great value in building multiple streams of income. From reducing the blow of an unforeseen financial circumstance like a job loss to helping you build wealth faster, it could be something worth pursuing for anyone who dreams of financial freedom.

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