In an uncertain and rapidly changing economy, the age-old adage of ‘not putting all your eggs in one basket’ feels more relevant than ever. The traditional approach of relying on a single job to ensure financial security is giving way to a new paradigm: the pursuit of multiple sources of income. A recent study – the Utility Warehouse Miis report – has laid bare the extent to which this is already happening, with over 20m people in the UK deriving their income from more than one activity. Here’s a closer look at some of the benefits.
Enhanced Financial Security
Contrary to popular belief, a single source of income is not necessarily the best way to ensure financial security. Of course, a guaranteed salary and benefits is a great basis, but it also means you are vulnerable to unemployment, which can happen suddenly. By contrast, having numerous streams of income ensures that your source of funding won’t suddenly dry up, and you can make adjustments depending on opportunities as market conditions change.
Diversification Reduces Risk
The same principle guides the world of investment, where diversification – namely spreading capital allocation across a range of assets including stocks, funds, bonds and cash – has been the dominant philosophy for decades.
The equivalent in the multi-income world would be a full-time job, freelance or contract work, investments, property or ‘side hustles’. It’s no surprise that these types of people were first known in the 1980s as ‘Portfolioists’ – proving why diversifying your income is important.
Again using the portfolio model, developing sources of income that are not impacted by market fluctuations, or do not suddenly disappear, is an essential part of creating financial stability and security. Otherwise known as passive income, this includes rental income, bonds and savings products, and royalties.
If financial security can be achieved, then financial freedom follows. The development of multiple revenue streams can accelerate the journey, allowing a larger proportion of funds to be reinvested. This leads to what Albert Einstein called the ‘8th Wonder of the World’: compound interest. It’s a virtuous circle, where your money continues to grow larger because the amount earning interest is getting larger – even when you do nothing.
At the same time, some of the best side hustles give you the freedom to work as much or as little as you want. For example, when you become a UW Partner.
Improved Quality of Life
Ultimately, developing multiple sources of income can help lead to a better work-life balance, and an improved quality of life. It means more time to work on personal projects, hobbies, and to spend with family and friends. Though it may seem unlikely at first, over time it’s possible to become one of the millions of Brits who already earn up to £10K a month via side hustles.
Diverse Skill Development
Another benefit of developing multiple sources of income is developing multiple skills. For example, learning new digital technologies or marketing techniques.
Not only does this continuous learning help develop a more holistic approach to work, it can often mean spotting opportunities to leverage skills across different areas, or increase your flexibility and help you think ‘outside the box’. These are attributes that many employers will value, boosting your ability to find a more suitable – and potentially flexible – primary source of income.
In the digital, interconnected world, having multiple income sources is a potential game-changer, offering a path to financial freedom and a better quality of life. It offers not only financial security and stability, but also the opportunity to live life on your terms. It also means building and delivering a legacy for your family, so your wealth – and the opportunities it creates – can be passed on to future generations. So, consider diversifying your income streams, and experience the transformative power of financial security and flexibility that comes with it.