Making money on the side without compromising one’s work-life balance is a dream many people have. Luckily, coming up with an idea for a passive income stream doesn’t need to be difficult. There are plenty of ways to make extra money, from writing ebooks on subjects you’re passionate about to investing in real estate.
However, too often, people assume they only need one stream of passive income.
This may technically be true. Plenty of people don’t actually need much extra money, they just enjoy having it. Maybe a single source of passive income yields enough money for them to enjoy a longer vacation each year or save for a major purchase, such as a down payment on a house.
That said, having multiple passive income streams may have significant benefits you haven’t considered. While establishing multiple sources of passive income will involve some extra work, it can be worth it in the long run. The following are a few reasons why.
Early Retirement
It’s unlikely that a single passive income business idea will make you enough money that you can retire early. While some people have managed to get rich off these types of side businesses, it’s not a common experience.
However, you may be able to retire early if you have multiple side businesses that deliver regular income with little ongoing effort. You certainly shouldn’t retire before discussing your circumstances with a financial advisor and making sure your passive income streams generate enough money to justify taking this step. However, early retirement may be possible if you’re willing to spend some time setting up a variety of income streams.
Reliability
You typically can’t depend on a single passive income stream to consistently provide you with extra money.
For instance, perhaps you decide to write and publish an ebook on a subject you have some authority on. You post it for sale online and do some basic marketing to make sure customers know about it. For a while, it sells. It may get to the point where you don’t even have to market your product actively. Word-of-mouth promotes the book for you.
At least for a few months. Maybe even a few years. But, after a certain amount of time, it is entirely possible that sales will dry up. You’ve been used to getting some monthly income from your ebook, but now you can’t rely on it.
That’s not a problem when you have multiple streams of passive income. If you also have an online course, real estate investments, and stock market investments working for you, a drop in ebook sales won’t have as much of an impact on your financial circumstances.
Pursuing Your Passion
Many people who strive to create sources of passive income do so because they want to shift careers. They may not be thinking about retiring early, but they’d rather work in a role they find more rewarding than their current job.
Again, making enough money to justify this step is difficult if you only have one passive income source established. It probably won’t yield enough revenue to let you accept a substantial drop in salary. Additionally, because you can’t rely on one passive income source to consistently provide you with the same amount of money for years, it may be financially risky to move on to a less-lucrative career.
On the other hand, if you have several passive income streams, it’s easier to make this decision. Multiple side businesses that consistently generate money can give you the financial independence to take your life in a different professional direction.
Preparing for Emergencies
No one wants to imagine losing a job or being put in an unexpected situation where they have large bills to pay off. Unfortunately, this type of experience can happen to virtually anyone. That’s why it’s important to set aside money for savings. Having a financial safety net is essential.
That said, it can be difficult to save money after paying all your bills. This is another good reason to establish multiple streams of passive income. If you find yourself in a financially precarious situation, having money coming in from multiple sources can be very helpful. Again, a single passive income stream may not be enough to help you in any substantial way if you were to lose a job. Multiple streams, on the other hand, can be very valuable in these circumstances.
Upfront effort, sometimes significant, will typically be required to establish a side business. However, the return on investment is potentially major. Put in some work now, and you can enjoy the benefits of making passive income for life.