How to diversify your income sources: A quick guide

Ways to diversify your income that you can start now

Choose something you love to do and make it profitable. Learn a new trait or skill. Providing consulting work in an area where you’re an expert. These are all places to get started in your quest for diversifying your income. Let’s offer some specific methods you can use right now.

Dive into affiliate marketing

Is there something you’re passionate about that revolves around products? Become an affiliate. For example, you may do a lot of gaming on your social media accounts, or you have a love of pets. Create a blog or use social media to earn an income from those accounts.

For example, you may be able to recommend products through an Amazon affiliate program for the pet products you know and love. You’ll earn a small payment for every purchase made through that program.

Rent out unused space

Do you have a full kitchen, bathroom, and bedroom in the basement of your home? Consider renting that space out for a sizable chunk of money each month. Do the same for any extra space you have at your business, whether it’s an office space or a warehouse area.

Renting out extra space allows you to earn a steady stream of income month-to-month, and that could mean you have the ability to use those funds to pay your mortgage payment.

Open an investment account

One of the best ways to diversify your income is to open an investment account that allows you to put money into the stock market. Even a small amount of consistently invested money into a stock market account can yield a steady stream of income while also working to build wealth over time.

Compare fees, stock market strategies available, and how hands-on you wish to be while investing. Determine what the initial investment may be, as well as your overall expected return and growth.

Note that you can and should diversify within your investment accounts as well. You may want to consider:

• A simple-to-use stock investment app.
• Investing in REITs.
• Purchasing bonds and CODs
• Money market investing
• Invest in an index fund
• Contribute to a venture capital fund

By investing in more than one strategy, you reduce some of the risk, especially if you diversify across numerous platforms and industries.

Freelance with your existing skills

Are you a talented photographer? Perhaps you enjoy teaching people how to draw. No matter what your specific skill is, you could build a side hustle around it.

Consider, for example, setting up virtual tutorials for your art skills teaching a group of people how to draw through a live session. If you don’t want to lead, offer your skills to those you know need them. If you’re a talented social media user, why not get paid to provide social media posts to a business that’s local to you that you love?

Check out a side hustle site

There are a lot of websites that will provide you with opportunities to diversify your income right from home. For example, consider PeoplePerHour and Upwork as two options. Fiverr is another option. Each of these services allows people to post for the help they need. If you can do the work, they can pay you for it.

These tools are available for everything from technology and writing to providing labor-based skills in your local community. They don’t always offer a steady income, but they may allow you to work when you have the time.

Set up a YouTube channel

Do you have a hobby you want others to know about or an opinion that you want to express? You could establish a YouTube channel and use it to grow your income. You can focus on any type of topic that is important to you.

It takes time to grow a YouTube following, but doing so could help you to make new relationships while also helping you earn a bit of funds from affiliate marketing and ads.

Launch an eCommerce business

Another route to consider is creating an ecommerce business, You can source items that you have knowledge about and turn them around to sell on eBay, Poshmark, Mercari, or other online ecommerce platforms.

This could become a significant time drain and require a good amount of prep to determine what you wish to sell. Yet, for many people, it is a nice steady side income that could provide a new way to diversify.

Create and sell a product

For those who are talented, selling the items you create could be an exceptional way to diversify your income. You can sell online at websites like Etsy, launch an Amazon store, or start your own blog and website. You can also sell your art or crafts at various shows locally.

The key here is to make something that’s one of a kind that people want and need. Then, get it into the hands of those most likely to use it.

Create a course to sell

Do you have a skill that others don’t? If people often ask you for help with something, you could take that information and skill and turn it into a course.

People purchase courses often as a way to get the hands-on experience they need to accomplish tasks, launch their own business ventures, or diversify their income.

Best practices for diversifying your income

Before you get started, keep the following tips in mind to ensure the best possible outcome.

Set up an LLC

If you’re serious about starting a business of your own, establishing an LLC can help to safeguard your business and personal assets. It’s a good idea to learn about the various business formation options to determine which could work for you, especially if your business starts to take off.

You can start an LLC to help protect your investments and keep any risks low. However, doing so means you’ll need to know the rules as they apply to your industry and state.

Factor in the taxes

Don’t overlook taxes on anything you earn. Though tax rates and requirements differ from one industry to the next, you can expect to pay taxes on any income you earn. And this could impact your tax bracket as well. Talk to your accountant about the specific impact this could have on your tax planning strategies.

It’s wise to consider all aspects of this, including taxes on earnings, sales, income, and services. Because this is a critical yet complex area of income diversification that differs from one industry and earning method to the next, it’s wise to speak to an accountant before getting started. When factoring in costs, you’ll want to consider taxes to ensure you have the best level of earning potential present.

Know the costs to startup

What will it take to start up this business venture? Sometimes, it’s just the investment you make into the stock market. Other times, you may need to obtain a business license, purchase inventory or equipment, and handle marketing. While that can all still lead to profits, it’s critical to know what to expect before moving into the launching of your new venture.

Calculate ongoing costs

Startup costs are one thing, but what will it take to maintain your business? Will you need a blog and website? Will it be necessary to continuously purchase inventory? While many side hustles do not require a significant ongoing investment, others do, especially if you are likely to grow it over time. Have a good level of expectation here by researching the industry and the costs associated with it.

Consult with industry professionals

Do your due diligence about any investment you make. Here are some questions to ask:

• Who are the competitors to you in this area?
• Why would people buy from you over anyone else?
• What happens if your investment falls through? Will it cause financial difficulties for you?
• Who are the industry leaders in this area? Do they have a podcast you can follow?
• What amount of time will you need to invest each day, week, or month to be successful?

The best way to get answers to these questions is to speak to an industry professional. Talk to an accountant about tax requirements. Reach out to someone doing the tasks you plan to do. Have a good conversation about expectations, hurdles, and opportunities.

Conclusion

If you do nothing to diversify your income, you cannot see improvement or gain peace of mind in a rapidly changing economy. However, if you put some time into learning a bit more about your opportunities and then find one or two ways to build a strong income stream, you may find there are a lot of opportunities available to you.