Diversification is a concept that I’ve embraced all my life. In the past, I have discussed investment diversification and also touched on the concept of income diversification. Today, I want to more thoroughly explore the idea of diversifying your income. When you think about income, most of you will immediately think about your full-time job (or part-time job).
However, if you want to retire, you’ll need income from other sources beside your job. As such, a way to determine how close you are to retirement is to look at how much income you have that is not coming from your job. The general rule of thumb is you’ll need about 80% of your current income to retire. Retirement aside, diversify your income is something that I believe you should start working on as soon as you can.
Let’s examine how you can start diversifying your income. For the majority of younger Americans, the income allocation probably looks something like this:
If you’re just starting out on your journey to diversify your income, I suggest working on the basic things like (assuming you already paid down your debt):
For example, this is how my current income looks like:
In addition to the ideas suggested above, take a look at my other articles: Extra Income Guide and 40+ Passive Income Ideas and Ways to Make Extra Money for more ideas on how to build additional income streams.