Today I have a great post for you by Passive Income M.D. I’m a HUGE believer in multiple income streams. For years I only had one with my band directing job, but since I left that profession to run this site I’ve slowly added more ways to make money. It’s definitely not easy, but even one extra source of income can be a huge boost on your path to financial independence. Enjoy! ~M$M
If there’s anything the last decade has taught us, it’s that no job is safe. The economy takes wild swings beyond anyone’s control, and unfortunately for most people, their only source of income is from their day job. When that reliable 9-5 disappears, they find themselves in serious financial trouble.
The great news is that Millennials, like no other generation, have a huge opportunity to create additional streams of income. That’s because of two reasons:
- That’s right, one is the Internet. The world wide web has created an obscene amount of opportunities and created a significant amount of wealth. All it takes is a little know-how, and the ways to generate income are endless.
- Resourcefulness. This generation more than any other has learned how to use their current resources to solve problems quickly and efficiently. They are not locked into one pathway and aren’t afraid to think outside of the box.
And now, more than ever, having multiple streams of income is bordering on necessity.
So here are 10 reasons why I believe Millennials need to develop as many income streams as possible:
1. Job security
It used to be that people would work at one job, climb the corporate ladder, and retire there. We all know that’s not the case today. With emerging technology, companies are being forced to pivot and what used to be considered “safe” companies are being forced to downsize or close altogether.
Just look at what Amazon is doing to the retail landscape. How many notable stores have you noticed announcing layoffs – Nordstrom, Best Buy, Macy’s. . . the list goes on and on.
When you’ve managed to acquire multiple streams of income, your “job security” isn’t tied to a single source. If the economy changes the revenue of one stream, you can rely on the others for a while.
Diversification is key.
2. Unique opportunities
With all the new opportunities that are being formed around you daily, why not follow your passions and dreams? What often holds people back? Often, it’s that they feel tied to a job purely for financial reasons. They rely on that job to provide life’s necessities.
But if you have several incomes covering the basic expenses, you’re free to pursue your passions–even if they’re not particularly lucrative. This is one of the greatest benefits of having multiple income streams.
3. Ability to stick to your values
More than any other generation in history, Millennials are known for sticking to their morals and values.
This generation doesn’t compromise their beliefs for anything.
So when you work for a company or group who might require a compromise, where does that leave you?
You either have to sacrifice your integrity or quit.
The ability to rely on yourself means that you live life by your own set of morals and values. This means less stress, and ultimately, greater satisfaction.
4. You can take risks
The time to take some risks is when you’re younger. Investing, venturing into your own business, or changing careers. . . it gets much harder once you build obligations like a home and family. Failure always looms at the back of any entrepreneur’s mind, but when you’re younger, failure is less likely to have the repercussions that it might later in life.
Plus, the more mistakes you make, the more you’ll learn. Better to get that out of the way as soon as possible.
5. You have the energy
Building some additional income streams takes work and dedication–a lot of it. You must educate yourself and find the motivation to pursue some of those things. The younger you are, the easier it is to do this.
Partly because you’re less likely to have obligations that take most of your time, and partly because, let’s face it, you need the energy for it.
6. Tax benefits
The new Tax Cuts and Jobs Act of 2017 actually benefit those who receive income from self-employment. Business income that passes through to an individual as a sole proprietorship from a pass-through entity (like an LLC or S-Corp) receives a 20% deduction.
This is subject to a maximum cap and you should review those details for further info.
7. Pensions are a thing of the past
Gone are the days where you could work 20-25 years at a company and they would take care of you until you die. Now, you need a retirement plan.
Employer contributions to your retirement fund are great, but having multiple income streams will help immensely–especially if you have the desire to retire at your own pace, rather than when your 401(k) dictates. Taking control of your future is a much more effective use of your time.
8. Social Security
In days past, once you hit a certain age, you could rely on Social Security to help pay the bills. But soon, this may not be the case. In fact, it’s entirely possible that Social Security will be depleted as early as 2035.
The financial safety net your grandparents collected will probably not be there when you hit retirement age.
This is all the more reason why having multiple streams of income is so important. Social Security may not last, but the work you put in now has the potential to carry you all the way through retirement.
9. Long-term wealth creation
It can be difficult to think long-term when you can barely plan for the next week. But the fact is, the work you put in now can have enormous long-term effects. Having multiple income streams can help you build long-term wealth without having to work harder.
You can work smarter, and leverage your time to achieve financial freedom earlier. And having freedom from the drudgery of trading your time for money means that you can focus on what’s really important to you–both now and in the future.
10. They will help pay down debt
Sadly, Millenials are graduating with more debt than any other generation. Student loan debt is reaching new heights, with USA Today reporting that the average Bachelor’s degree yielding $30,100 in debt. Add graduate school on top of that, don’t be surprised if your debt is in the six figures.
Of course, the more money you have coming in means you can pay down your loans faster. If you do have a lot of debt, paying it off is incredibly liberating. It’s also vital to your financial health.
Final Thoughts
Millionaires, on average, have seven streams of income. They’ve learned that diversification is the key to long-term wealth creation. This, in turn, is the key to achieving what many people dream to achieve: financial freedom.
Not sure how to start? Well, here are 7 side hustles you can actually start this year.
Start as early as you can. Educate yourself and do the work. Achieving financial freedom is very possible, and if you can do it, you can live life on your on your own terms. When it comes to living on your own terms. . . the sooner the better.
Passive Income MD is a physician who has achieved financial freedom from his day job through multiple sources of passive income. He blogs about his journey in hopes to help others achieve the same. He still continues to work part-time, however, because he loves what he does.
I love the ‘paying down debt’ thing and think it’s a great use of side hustle $$.
Most of what I bring in on the side will probably be spent paying down the mortgage or investing. I’m treating it as money that we aren’t relying on in any way – no lifestyle inflation, etc. The less I even know it’s there, the better! Haha
I love having multiple streams of income. I also like their limitless potential – even though right now my day job makes the most money and pays the bills, there’s a chance that one of my income streams could dwarf my day job. That makes those income streams that much more thrilling!
Spot on Doc! This post is perfect in that it covers all of the benefits of having a side hustle. I do find it funny coming from an MD though. Considering that MD’s are highly paid, spending time to make money at anything other than working in medicine seems a little inefficient. Do you have a side hustle that takes advantage of your education?
Jason,
Despite our high incomes there definitely are benefits to physicians spending time on side gigs and income streams. Doctors are increasingly employed by hospital networks rather than owning their own practices. That results in little opportunity to build equity or get tax deductions. The retirement fund options are limited. Also, if you have one employer as your only income, you have reduced negotiating ability. Because of that, your employer can require you to work more hours and to see more patients per hour. Without FI you have reduced negotiating clout. This is a contributing factor to the pervasive problem of physician burnout.
Two thumbs up for #5.
A lot more energy is required to get things moving. Start when you have fewer obligations and more free time.
Get those income streams built early and they will require less maintenance in the long run.
The compound effect is amazing like that.
Great list, Passive Income M.D.
There is another side too, for a gifted few (like doctors)the 9 to 5 can provide tremendous wealth, my former CEO got the job at 31 and has made tens of millions in compensation since then. You can’t reach his level of excellence, or mine for that matter unless you focus on one thing with most of your energy. Having multiple parallel gigs has all the benefits you mentioned but unless they are closely related you are also almost locking in mediocrity in several things versus excellence in one. I made a lot of money in the corporate world before I retired early and set up my five side gigs. They are fun, profitable, part time and I am good at them but I’ll never be world class because I won’t devote enough time to any one of them to get there. That is fine for my retirement because I also have a lot of volunteer work that matters but I wouldn’t be where I am now if I had tried to manage side gigs while I was a corporate exec.
Thank you for including “Pensions are a thing of the past.”
The majority of my colleagues/friends still refuse to save, or contribute money towards their 401(k)’s. They say I am crazy for putting all the money that I do away, yet never seem to tell me how they are going to save for their retirement. I am not sure if the majority just think their company’s will fund their retirement (via pension) when they get old enough, but that type of pension dream is long gone. It’s all on YOU for establishing your own retirement now.
It doesn’t seem to hit most people until their later years, and then they eventually regret the decisions they made in their 20’s & 30’s.
Great list!
Good points.
I have been a believer in having side gigs and multiple income streams for the last 20 years. Because of that -despite a variable savings rate, no budgeting, and investment blunders galore – I achieved FI. I’m not dependent on my job for income. I work part-time now. I still like it and I enjoy the benefits, work, and paychecks. Most of us find that all kinds of options open up when you have FI.
Passive income is the key to financial independence. Warren Buffett has a great quote along the lines of “Unless you learn how to make money while you sleep, you will work until you die.”
Great article, thanks for posting!