One of the popular topics in personal finance is having multiple streams of income. If you want to build an unbreakable financial position, you want two unique sources of income that can reliably cover your living expenses. I am not saying you don’t need a strong emergency fund, but the best emergency fund is one you never need to touch, and having two streams of income that can fully cover your living expenses is the easiest way to accomplish that.
The real beauty of having these two income streams is that they will help you to build a third stream of income; passive income from investments. 1 million could last a lifetime if you only need 30K per year.
Once my side hustle/writing career grew into a secondary income stream, I got way too excited and tried setting up endless streams of new income: Online courses.
Right now, I have two unique sources of income that can cover my living expenses: Generating enough passive income to cover your living expenses is hard and takes most people their entire lives. The only way to shorten the amount of time it takes to build that much passive income is by maximizing your savings rate, the percentage of your take-home pay that you save and invest. So, right now, I am taking all of my surplus money from my day job and side hustle and investing it.
The real problem was that I was spreading myself too thin. I learned the hard way that my human capital has diminishing returns at a certain point. One day, when one of my income streams is passive income from my investments, it might make sense for me to pursue some of these other income streams.
Originally Inspired by Ben Le Fort