One of the things that clearly differentiated those clients that struggled the most during the aftermath of the Covid pandemic and the associated lockdowns from those that weathered the chaos better, is that those with more than one income stream coped much more easily than those that didn’t.
Having more than one income in a household can take the form of either:
- Both spouses working or earning OR
- One or both spouses having an additional income stream either as a “Side Hussle” or a 2nd full or part-time job.
It’s pretty self-explanatory that there is a much lower chance of losing both incomes in a home, than only one and even more unlikely to lose all 3 if you can manage to establish a 3rd income stream.
Example: Let’s assume 1 out of every 10 people lose their income during an economic downturn. That means that a single income home has a 10% chance of having no income while a double income home has only a 5% (1 out of 20) chance of having no income.
During 2020 I am aware of the majority of people either taking a pay cut on one or even both salaries and in quite a few cases completely losing one, but out of all our clients, there is only one case that I am aware of where both salaries were lost.
The rest struggled but they coped because their income sources were “Diversified”. In the same way that we recommend clients to diversify their investments we also recommend that as far as possible, try to diversify your income streams. If diversifying your investments is about “not keeping all your eggs in one basket” then income diversification is about “not keeping all your hens in the same hen-house” because you never know when the “fox is going to get in”.
Some ideas on how to start multiple income streams:
I will be posting ideas and examples throughout the year in our newsletters and via our social media posts.
- Get a job. It’s the most simple and obvious example but is also one of the easiest options and can’t be left off of the list.
– If only one member of a household works the simplest strategy is for the other member/members to seek employment. I am fully aware that typically during times of economic downturn there are fewer jobs in the economy but there are always people willing to pay other people to work for them. People often make the assumption that there are no jobs before even having tried to find one.
– Get a 2nd job. This option is easier for some than others and typically is a good option for people that currently work one part-time job or work shift work where they have periods of multiple days between shifts. My wife used to work as a veterinary night nurse with 5 nights on and 5 days off. She would often assist at doggy parlors or work locums at other practices during her off time for an extra income.
- Get a “Side Hussle” – Start a part-time/full-time business
– This could be as simple or complicated, formal, or informal as you like but the flexibility and benefit or running your own small business can make a huge difference to your financial freedom and if done well, could even replace your job if you have the appetite to take on the risks of being a full time small business owner.
o Some of the ideas we will be discussing throughout the year will cover:
- Referral / Affiliate marketing businesses
- Sales (Commission only sales-based businesses)
- Network Marketing Businesses
- Product based home businesses
- Service based home businesses