How many streams are currently feeding into your income kitty? If your answer is one, a few things need to change. Depending on one income stream is just too risky in the current economy.
As a financially aware individual, it is always vital to safeguard your main income source. But life is unpredictable, and if you have only one source, there is only so much you can do.
In the prevailing times, relying on a single source of income can be catastrophic. As you build your career and earn more, you start picking up more financial responsibilities, including, say, kid(s), spouse, as well as supporting parents and siblings. At this point, it is agreeable that you do not want to go broke.
Therefore, establishing reliable multiple sources of income should be a top priority. It is the only way to keep your cash flow steady and ensure that you have a safety net to fall back on even if one dries out.
Your eggs should never be in one basket, regardless of whether you dream of becoming a wealthy multimillionaire or you just want to establish a comfortable lifestyle for yourself and your family. There are too many unknowns - too many things out of your control.
Take the pandemic, for example. Who would have predicted that a virus would sprout out of nowhere and throw the world economies into chaos, leaving so many people out of employment overnight?
So even with an already established savings plan and an ample emergency fund, you still need to start thinking about diversifying your income.
In investment, diversification is a strategy used as a way to manage risk - an investor mixes different investment types such as stocks, bonds, real estate and so on within a portfolio, limiting exposure to any single asset or risk.
This is such that if he makes a loss in stocks, the other less risky investments such as bonds will offset this loss - no single investment can significantly hurt their financial position if the risks are well spread out. The same idea applies to income diversification.
Income diversification refers to the idea of establishing multiple income sources from numerous independent sources. In both investing and income generation, diversification helps you hedge the risk of income loss.
Also read: Why You Should Diversify Your Income
Here are some ideas
Many small and medium-sized businesses, and even big corporations prefer to outsource some of their business functions to lower operational costs. They engage individuals or small consultancies to take care of these tasks to help them attain their business goals - tasks such as digital marketing, tax consulting, legal consulting, financial consulting, web development, etc.
You can market yourself as a consultant in your industry or in line with your expertise and tap into this market. There is no better way to make a quick buck on the side than to sell your knowledge.
Whether it is your main career skills and expertise that you have gained over the years or just a skill you learned as a hobby along the way, you can sell it and make it another source of income.
There are two broad ways to monetize your skills. You can formally set up a consultancy business and skillfully market it to reach your intended market. For example, depending on your industry, you can market the new business through your professional network or get referrals through family and friends. You can also market through a website or social media sites and networking platforms such as LinkedIn and Twitter.
Alternatively, you can use freelancing platforms such as Upwork to source clients for your consultancy business.
Another great way to earn an extra income is to sell your skills and expertise as education materials.
Today, learning is slowly but surely shifting online - many people are looking for online courses and workshops to teach them various skills. With your skills and expertise, you can make a reliable income by offering courses, lessons, or even workshops and webinars online and offline.
There are two ways you can sell your resources online. Depending on your teaching materials, you can use sites such as Udemy, Learnworld, and Skillshare (among others) to host your courses and other online materials. Alternatively, you can create a professional website and host your materials there.
The only disadvantage is that it might take time to gain a good reputation and build a solid client base. But once you have established yourself as an authority in your industry, it will be an effortless source of additional income.
Stocks are a highly liquid investment, and they can easily be bought or sold. But many people are intimidated by the prospects of investing in the stock market. This is because not many people understand how to buy/sell shares and how the stock market works.
But the truth is, you do not need to be a sophisticated investor to succeed in the stock market. In recent years, the stock market has significantly evolved to allow investors to buy and sell securities even without prior experience in buying, selling, or trading shares.
Your stock market journey starts with these four simple steps:
Alternatively, you can invest through a broker. There are many regulated and reputable stockbrokers to accommodate investors who don’t want to go through the hustle of trading personally.
As a stock investor in Kenya, you can earn a steady income from buying and selling securities and earn dividends and capital gains from being a shareholder.
On NSE, you can buy as little as 100 shares per investment. So the minimum amount you can invest is the price of the stock you are looking to buy multiplied by 100 shares. Hence, there is no excuse not to get started today.
Note that investing in the stock market comes with relatively higher risks than say bonds and money market funds. It is very important that you conduct a lot of research, employ the services of a skilled financial advisor/stock market expert and by all means make sure that before putting your money on the line, you are fully aware of the risks - as well as the potential rewards.
Given the many scandals in Kenya historically, real estate might seem like a get-rich-quick scheme. However, it can be a goldmine with the right plan and mindset. In fact, real estate is probably the only asset class with a long-term historical trend of value going up.
Many people get into real estate by buying pieces of land and speculating - the much ridiculed obsesion of Kenyans with plots. But the industry has many other investment options. You should not limit yourself by only buying and waiting for prices to go up so you can sell.
Here are some other options to keep in mind:
Another great way to create a steady extra income source is to create a product and sell it. It doesn’t have to be a revolutionary product. You can create a simple, useful physical product, such as an effective beauty product, or even a digital product, such as a mobile app or even printables.
All you need to do is identify a gap in the market and create a product that will help solve the identified problem. If you choose to sell a physical product, there are various ways you can market and sell the product.
First, and depending on the product, you can rent a physical location, and a family member, e.g., your spouse, can help run the day-to-day operations. Alternatively, you can employ people to market and sell the products or partner with other businesses such as supermarkets to reach the final consumer. You can also build an online eCommerce store on a site like Etsy or Shopify or a simple website to host your products.
There are many sites to host and market your products for digital products. For example, you can create and list your mobile application on Google Play or Apple store and then promote it using social media and other channels.
It might take some time to attain a sustainable customer base with a new product, but it is sure a great way to build a reliable side income.
Another low-effort option to make an additional income is to lease your property. A good example is renting out an extra space in your home or property.
For example, if you have an extra room in your house, you can list it on Airbnb and start receiving guests who want to experience a home atmosphere. All you need to do is ensure the room is in a good livable condition, take a few pictures, create an account on Airbnb and start receiving guests.
This is also not only limited to the extra room in your home. You can also purchase or rent properties and use them to create the same business model.
Another good example of leasing your belongings for extra income is to use your vehicle for transport services such as Uber, Bolt, etc. Alternatively, you can create a small vehicle leasing business and start leasing out your car/s for short-term or long-term use to individuals or even companies.
There are many ways and limitless things you can lease out to people who need them to generate extra income. Just check around you, weigh your options and find something that people would be willing to pay to use for a few days.
When it comes to your income, you can never be too safe. Leaving all your eggs in one basket is not an option in these times. Think about what would happen to you if that basket breaks. What do you do then?
It is always important to have a fallback plan if something goes wrong with your main plan - which is often your day job.
Above are some ideas to help you diversify your income sources. Other ideas include: