On Friday, we discussed diversifying income by creating multiple streams of income. This will hedge against the impact of one stream shrinking, or being eliminated altogether. We will now discuss an example to help illustrate this idea.
How Do You Diversify Your Income Streams?
Let’s say that you decide to write articles online. There are a number of people out there that make $500 a month, and even a few that make over $1,000.00 a month and I’m providing a few examples to get you pumped:
Many online writers start out like regular people with normal jobs. They made a normal paycheck doing average things, but they wanted more. Suppose that some of these people continued their normal jobs. Lets say they make $30,000.00 a year at their normal job. With their new-found income they are making anywhere from $42,000.00 a year to $66,000.00 a year. If they lost their jobs before getting the passive income they would have lost 100% of their income! That is absolutely devastating, but after getting the passive income moving they will not only lose about 71%. That is still devastating, but not nearly as bad.
Diversified Income Cushions The Blow Of A Layoff
Losing 71% of your income due to a layoff is bad, but not nearly as bad as the 100% loss that most people face. Now consider this: the last example was only one extra stream. If they had multiple streams going, then they’d be in even better condition. Let’s say they couldn’t duplicate the success of the articles but they were able to create another stream that gave an additional $5,000.00 a month. Now, if they lose their main job they have only lost 64% of their income!
The beauty of passive income is that you never have to leave it dormant, you can always keep it growing. If you want more income, write more articles, or purchase more dividend yielding stocks. You can always increase your passive income with a little more work and a little more effort. The above stories are from last year, and I would be willing to bet that those people are experiencing even more success with their articles now. Remember, passive income doesn’t have to replace your income, it can easily be a supplement that will help you greatly in the event of layoff or some other emergency!