Do You Have a Second Source of Income?
I know there are people struggling out there for a main source of income, but I think the job market has significantly picked up for college educated young professionals. If you’ve used any of my networking tips, you may have already landed your first job and started thinking about your next one. It’s human nature to want more; you get a good job and then want a better one. When you get a raise, you’re happy for a year or two, but then want another one.
A second income can be beneficial for many reasons: it can provide you with extra income to spend, save or temporarily provide in the event that you lose your main source of income. There are hundreds of excuses not to create a second source of income, but if you’re motivated enough, you can prioritize and make time for it. During the day, I work as an engineer, and 5 months out of the year I coach a local club volleyball team. The pay wouldn’t be significant by itself, but it does add a nice chunk on top of my day job income. It requires about 10 hours a week and luckily it’s something that I really enjoy doing. I’ve been playing volleyball for over 10 years, and coaching for the last 5 so it’s something that I know very well and I’m good at.
Find Your Niche
A second source of income is different than a second job. A second job is something that you have to do to survive while a second source of income should be from something that you enjoy. In the best case scenario, your second source of income could even become your main source. I know a few online entrepreneurs who have been able to quit their full time job and work full time for themselves. Even though this is probably the exception, and not the rule, it’s nice to see some success from like minded individuals.
What job would you choose if you had enough money to do whatever you want? Whatever your answer is, try to turn that into your second source of income. There are many avenues available online and offline that will allow you to sell your services or products. In college, my main job was going to school, but I also tutored local high school students in geometry and algebra. I have always been good at math and science so I used my skills to teach others and got paid for it.
When it comes to stocks and bonds, I often talk about diversification. It’s important to diversify your portfolio to comfortably ride out the ups and downs of the market. The same principal applies here. If you lost your job tomorrow, what would happen?
If I got laid off tomorrow, I would definitely have to cut back my spending and dip into my savings to pay all my bills. But my second source of income would help me get by and I could even try and ramp up that income by coaching another team, giving more private lessons, etc. It’s a lot easier to expand a source of income that’s already in place as opposed to starting from scratch.
Multiple Streams of Income
A lot of people like the idea of passive income: money that comes to you without any type of active work. But I hate to break it to you, in order to generate passive income, you need active income first(and a lot of it!). If you want to enjoy the cash on cash returns of real estate, you need to save up 30% for a down payment and have a large source of active income that will allow you to get a mortgage. I think people tend to get too caught up with passive income when they could be doing things today to generate active income.
Exploring multiple avenues of income will enable you to build active income. Work hard now and save up so that you may some day rely on your passive income. Young professionals have time, energy and knowledge on their side. We should be focusing on ways to generate active income, not passive.
My blog is just another way to expand my income source while doing something I’m passionate about. I don’t think this site will ever make as much as my second or first source of income but it would be nice to get a couple hundred dollars a month in income from it.
Creating a source of second income can be tough at first, but the long term benefits should greatly outweigh any initial fears or apprehension. I love my second and third sources of income and I would probably even do them both for free. I can spend the extra money I make, save it or invest it. A second income can provide options in case you ever find yourself stuck working 40 hours a week doing something you hate.
Readers, do you have a source of second income? Do you have any ideas for creating a source of second income and what’s holding you back?
-Harry @ PF Pro
Tags: Emergency Fund, Income