Diversifying your income with multiple streams of revenue is one of the best strategies for building wealth. Not only will you increase the total amount of revenue you generate, you’ll also protect yourself against the inherent risks of relying on only one source.
Unfortunately, each new stream of income you add is going to make your finances more complicated. You’ll need to take new measures to manage your time, income, and information if you want to be successful.
Each new gig or side hustle you add to your lineup is going to add more hours to your schedule—which means you’ll need to invest in your time management capabilities, especially if you already have a full-time job.
These are some of the best ways to do it:
- Pick a main priority and stick with it. You may be able to split your time evenly between all your money-making activities, but that doesn’t mean you should. Instead, it’s better to pick one main priority and ensure that all your other endeavors remain secondary to it. This is beneficial because it prevents you from spreading yourself too thin in this area, and because it allows you to min/max your skills; in other words, you’ll spend the most time on the responsibilities that are most beneficial to you.
- Have a clear priority hierarchy. For all your side jobs, you should have a clear hierarchy of priorities established. As a simple example, you might have A-level priorities, which need to be done same-day, B-level priorities, which should be done in the next day or two, and C-level priorities, which may be left to the back burner. This will help you respond to new developments quickly, and help you compare apples to apples when you have competing tasks from two different jobs.
- Don’t be afraid to delegate. As you grow busier, don’t be afraid to delegate. Consider hiring an assistant, or recruit a few freelancers or managers to have on standby to tackle some of the tasks that are easy to transfer. You never know when you’ll need an hour freed up for a more pressing matter.
You’ll also need to keep track of all your expenses and income from each of your opportunities. You’ll need this documentation for tax purposes, but also for analyzing your past efforts and optimizing your time for the future.
Follow these tips if you want to be successful here:
- Use a preferred platform. A general ledger on an Excel spreadsheet is still the preferred medium for many, but you should also look into a cloud platform designed specifically for accounting. Pick something with intuitive features that will encourage you to track your income, expenses, and other items religiously.
- Keep both separate and combined metrics. Track income and expenses for each of your side jobs and income streams separately, but also keep a general ledger that combines all your information into one location. This will make it easier for you to analyze your performance and determine your profitability at any level.
- Allocate time for administrative upkeep. Make sure to leave yourself at least a couple hours each week to log your new expenses, manage paperwork, and update your systems. If you fall behind, it will be nearly impossible to catch up.
Budgeting and Projecting
You should also spend some time altering your budget, projecting your future income, and evaluating your long-term goals.
Here’s how you can do it:
- Budget conservatively. One of the best ways to become financially successful is to plan and budget conservatively; in other words, underestimate your income and overestimate your expenses. With variable income from multiple sources, this will help you stay ahead of your finances effectively.
- Look for the most profitable opportunities to scale. Scrutinize all your income streams carefully. When it’s time to make an investment in one area over the others, you’ll want to choose the avenue that’s most profitable—or the one with the most potential to scale.
- Cut your time wasters. Finally, don’t be afraid to cut out income generators that are no longer worth your time. It’s true that it’s beneficial to have multiple income streams, but if one of those streams is costing you hours of work for a negligible return, you’ll need to cut it from the lineup.
Multiple income streams, especially if they’re passive, can help you prepare for the future you want, but only if you know how to manage them properly. You need to be prepared for those streams to introduce more time requirements and more complexity in your life. That said, if you have a plan to face those challenges head-on, and you avoid growing too quickly, those extra requirements shouldn’t be enough to prevent you from seeing those advantages.