You’ve probably heard the phrase “multiple streams of income”. I’m not sure if he started it or not, but I first heard the term in a book written by author Robert Allen many years ago.
The idea of multiple streams of income is that you earn money from a variety of sources. Money is flowing into your life from the left and the right, from up and down, from the north and the south. You get the idea.
As you might imagine, I’m a big believer in multiple streams of income (who wouldn’t be?). Making more money is usually a good thing (as long as you don’t kill yourself while doing it) and it’s good to diversify income sources in case one stream gets cut off.
You know who else often has multiple streams of income? Millionaires. Just read through our millionaire interviews and you’ll see how often they have a variety of income sources.
Perhaps these people are onto something…
Earning Money in Many Ways Before and After FI
As you know, the “E” in E-S-I stands for “earn.”
In most cases we talk about earning being comprised of two major efforts: your career and a side hustle.
And rightly so as these are by far the two largest earning options for the vast majority of people.
That said, they are not the only ones. So why not investigate the options and see if you can add a few more income streams to your finances?
If you can develop multiple streams of income in addition to the two options above (and not increase your spending), they will help you big-time in a couple ways:
You will get to Financial Independence (FI) sooner: The more you earn, the more you can save and invest and the sooner you get to FI/retirement. Pretty simple.
You’ll have extra margins of safety in FI: Regular readers know that I’m a big believer in having several margins of safety in early retirement. The reason: you never know what bad event might be just around the corner so it’s best to have a buffer built in in case something goes south. And if you have multiple buffers, you can then guard yourself against more severe events as well as ones where another margin of safety just isn’t enough to do the job on its own.
So having multiple streams of income is a pretty good thing. That’s why I thought I’d list the multiple streams of income that helped me get to FI as well as what I have now that I’m retired. Then you can then chime in with your streams (maybe some we’ve never considered) to develop a big list of options for all to consider.
Pre-FI Streams of Income
Here are the various income streams I had on my way to FI:
- Job – Salary — Like most people, I had a job (many jobs actually over a 28-year career). And for doing my jobs, I received a salary. Also like most people, my salary was my largest source of income. This is not unusual because a job/career is an asset that’s worth millions of dollars. I spent a lot of energy working to grow my income and as a result averaged over 8% annual increases. If you want to see how much growing your career can impact your finances over time, check out my Impact of Career Growth Calculator.
- Job – Bonus — In addition to my salary, I earned a bonus in most of my jobs (for about 20 years of my career I was eligible for a company, personal, or combined bonus.) I earned a bonus in roughly half the years I was eligible for one. These were not entirely under my control (especially as I moved up and more were tied to overall company performance), but when the objectives were met, this was a significant source of income. We almost always banked my bonuses, putting them into index funds.
- Job – 401k Match — I considered my 401k’s matches to be “opportunity money” — money that was available for the taking if I made the right moves. For almost all of my career we not only contributed enough to get the entire 401k match, but we contributed the full amount allowed by law. The match amount alone has added up to a significant amount of money!
- Side Businesses — During my working career I had a couple side businesses that added to my income. I was a successful freelance writer for many years, penning pieces for regional and (eventually) national publications. I got one gig that even paid over $1 per word written (unfortunately, they limited how many words I could write.) It was the extra funds from this business that allowed us to pay off our mortgage in less than 10 years. After that, I had a blog that made a nice income (though I gave all the profits to charity.) (BTW, I had a failure along the way as well. I tried a multi-level marketing “business” that never panned out.)
- Cash Back Credit Cards — As you know, I have used cash back credit cards for years. I have always paid the balance off in full and never had a fee of any kind. Over the years I’ve earned almost $20k this way — not a fortune, but not chump change either.
- Soccer Referee — I would classify this as more of a “second job” than as a side hustle, but you could call it either one. My son and I were “professional” soccer referees for several years. We refereed club games and were paid $15 to $40 a game (each) depending on the age of the kids plus what positions we filled (referee or assistant referee). He did it for the income while I did it mostly to help him, get some exercise, and pay for cable TV (my agreement with my wife). That said, I made $1,500 a year or so and could have easily made twice that if I had wanted to do more games (we generally limited our games to Saturdays only).
- High Interest Checking — Another source of opportunity money was high-interest checking. We had a credit union checking account for many years that paid 3% on the first $15,000 deposited. It wasn’t a fortune, but was decent money (3% looks great these days in hindsight) for doing virtually nothing.
- Dividends — As our investments grew, our dividends from those investments grew accordingly. We didn’t invest for dividends/income (we were in stock index funds mostly for growth), but they happened naturally. We always reinvested them to keep the investments growing.
- Rental Properties — Just after I reached FI, we bought three rental properties with a total of 14 units between them. These have been great money makers and represent the biggest income producer during my transition from working to retirement.
So those were the major income streams that helped me get to FI. I might have had a few others that I can’t recall, but these cover 90% of our income for sure.
Retirement Streams of Income
After reaching FI, I worked another decade (because I was a moron) until retiring at 52.
As of now, here are my various income streams:
- ESI Money — It’s funny how something that started as a fun hobby and a dare to myself to see if I could make another successful site is now my largest source of retirement income. Now that I’ve sold Rockstar Finance, I have more time to write posts for this site and others, something that’s driving traffic and thus revenue. My best guess is that I’ll earn roughly $50k from ESI Money this year. In addition, I’m thinking about creating a product, so if that happens, income could even be much higher.
- Rental Properties — I’m pegging this at $45k per year, down from the original $60k. I’m entering the phase where my units need some major updates, so that’s going to eat up some extra money.
- Dividends — Our investments are now at the point where they are churning off $40k in annual dividends. These are purely from index funds mirroring the market of stocks, not funds designed to generate dividends. Most of these are in tax-advantaged funds, but starting next year we will begin getting access to these as my wife turns 59.5. A few years later I’ll turn 59.5 and we’ll have complete access to the bundle where all my 401ks are rolled over. Not sure we’ll take the dividends or just reinvest them. Stay tuned for that decision.
- Debt Investments — I’ve noted a couple times that I have a friend who’s investing in real estate and needs others to fund it. So far I have $60k with him earning 10% annually. I have also made an additional $90k available if he needs it. So this alone could generate $15k a year.
- Interest — Even with the investment above, I still have a TON of money in “high yield” (i.e. just over 2%) accounts. I had been building up cash and then added a ton more when I sold Rockstar Finance. If this money stays put it will earn around $9,000. I’d rather deploy it into something more profitable like a business or real estate, but finding a good deal these days is difficult.
- Wife’s Job — I feel bad every time I tell someone my wife works since I feel like they think she’s working so I can retire. But the real story is she was a super volunteer at our church, they wanted her on staff, and despite her not really wanting to be employed she agreed to 15 hours per week. She sometimes works more and sometimes less, but does enough to earn $6k per year.
- Credit Cards — Yes, we’re still using cash back credit cards to get as much opportunity money as we can — around $1k-$2k per year or so.
If things got tough for one reason or another (and I didn’t want to dip into investments for some reason), I could add a few sources of income making for an even greater margin of safety. We could add:
- Another side hustle — or just a “hustle” now as it’s not on the side. 😉
- Go back to work — I still get calls from recruiters wanting me to interview for jobs.
- Social Security — We’ll cross this bridge when we come to it, but I am beginning some preliminary research on what I’m owed, when we’d take it, etc.
- Wife working — The church would love to have my wife go full-time.
So that’s it for us — what got us here and where we are now.
What are your multiple streams of income both now and in retirement (if not already there)?
Dan Murray says
Thanks. Consistently useful information.
I am a huge believer of multiple income streams and especially passive income streams (which as a busy doctor for my primary gig makes sense as I don’t have as much time to devote to side hustles).
I consider my overall portfolio split into two categories: Market and Real Estate. My Market is further divided into Retirement and Non-Retirement accounts and like you is primarily invested in index funds (total stock, bond, REIT, international).
It is the real estate side that is really pulling the weight (had a massive cash flow infusion last month with the sale of the medical building I was a ground floor investor in). I am currently in the process of deploying that money into other real estate ventures.
The goal is to get my passive income level to $125k/year (exclusive of retirement accounts) and because of the building sale, I am getting incredibly close.
Nice breakdown of how you generate your income streams. My blog is still in the infancy stage and if it ever gets to $40-50k year I would be incredibly pleased because right now it is a passion project (taking way more time than I get financially compensated for).
Mike H says
This is a great article. You are killing it, ESI.
My main passive income source is an after tax dividend portfolio that is on track to produce $108k of income per year. Add tax advantages dividend income of 12k, rental income of $12k, personal coaching of $10k, quora earnings of $1k, interest income of $4k.
I’ve had multiple jobs this year at a few months at a time that has currently paid $52k year to date and have a current sales part time role paying $4k a month starting June 1st but it’s not clear if his will last the entire year or not.
Overall it’s a lot of fun to generate all these streams of income. But it really takes a lot work, that’s for sure.
Bernd Doss says
Military retirement pension
Civil service pension,
Combat Service Compensation,
Multiple sources of income and enjoying retirement benefits for over the last 36 years.
Retired at 55 spending 80K/yr
1. Dividends from stocks/bonds
2. Very Small Federal gov pension
3. Social security in 5 yrs @70
Hate Real Estate but have some REIT ETF
Multiple income streams have gotten us to a 7 figure annual household income and comfortable 8 figure net worth. Majority are passive.
-Business income currently $2-2.2M/year, 50% overhead. (not passive to semi-passive)
-Commercial real estate lease income $350K/year (5 tenants) 50% overhead. (semi-passive)
-Retirement plan returns approx. 12%/year (currently about $200K/year on $1.7M) (passive)
-Non-retirement CD/interest currently at 1.5-3% (currently about $50K/year on $2.1M) (passive)
-Ebates cash back $1500 total so far. (passive)
-Credit card cash back $3K/year. (passive)
-0% credit cards approx. $10K saved interest on transferred debt/year. (passive)
-Real estate appreciation on $6.5M properties, estimated 7%/year ($455K/year). (passive)
-Real estate tax depreciation approx. 85K/year. (passive)
-HSA tax exemptions approx. $2.5K/year tax savings. (passive)
-Online surveys $2K-10K/year. (not passive)
-Partner funded paid meals, $3K/year. (passive)
-Maintaining health, high deductible health plan (approx. $7K/year savings). (semi-passive)
-Current value of business $7M. (passive)
-Couponing on approx. $1.5M total annual expenses – huge! (semi-passive)
-Almost exclusive online shopping – savings on gasoline, vehicle depreciation and repairs, avoiding collateral purchases, saved time, etc. (semi-passive)
-Tax savings on equipment depreciation, business expenses, tithe, etc. (passive)
-Social security – ughh 20 more years still to full retirement age. Approx. 6K/month based on today’s numbers. (passive)
-Online blog. Not even going to try. Can’t compete with ESI!
Many more opportunities in the gig economy. No reason not to diversify, reinvest and prosper with coveted passive income streams.
Retired at 56 with a 100% equity portfolio generating Can $140,000 in dividends and US $114,000 in dividends annually. Husband receives CPP (like SS) of Can $9,000 per year. I will be eligible to receive the same once I turn 60. We have been retired since 2017 and spend our winters at our home in Florida (we live in Ontario) so we need to generate USD income to cover our US expenses. I consider each of my blue-chip dividend stocks to be its own income source. We own around 30 US stocks and around 30 Canadian stocks. We only spend the dividends and not the capital so price movement is not as “scary” to us. This allows us to sleep well at night. We love, love, love being retired!!
how do you get over 100k in dividends in blue chip stocks, how large of a portfolio is that?
Are there any mutual funds that could do the same?
I like the idea of spending only the dividends and not being so concerned about the price movment. It seems to me the index funds have too low of a return (sub 2%) so i still have the worry of market movement vs the guarantee of the dividends.
Would love to learn more, thank you
ESI! You hit me with an ’80s flashback on late-night infomercials with those real estate ‘no-money-down’ real estate flippers! Wow. Tom Vu, Ed Beckley, Albert Lowry…I watched them all as a broke college student with no reason to get up early in the morning. Robert G. Allen was the king, though; his gimmick was being dropped off in a city with no money, no id, and his challenge was to buy a property with no money down by the end of the day (spoiler-he always succeeded…and so can you!). So, yeah, multiple streams. You and Mrs. ESI are walking the walk!
Am interested to get your take on Social Security, when your preliminary research is ready to share with us readers. In the meantime, a recent book “Get What’s Yours” by Laurence Kotlikoff is the best resource I have ever come across. And here are two resources that can get you immediate personalized options for your own use…
First, confirm your projected benefit for yourself and spouse, here…
Then use that information to get maximized profiles here…
Razorback 14 says
Great information, ESI —- thanks for posting ✅
Only 19 more months for my wife and I to work. Retirement is looming and we’re more than ready —-
Retirement date is set –
December 31, 2020
We have “2020” vision —-
Once we retire, here are the streams of income we’ll have —-hopefully, this will stay in place —-
1. Teacher Retirement pension (me)
$5,200 (monthly net)
2. Teacher Retirement pension (wife)
$2,500 (monthly net)
3. Social Security (me, at 70)
$2,500 (monthly net)
4. Social Security (wife,at 67)
$1,300 (monthly net)
5. Rental income (goal – 3 homes) already have 2 rental homes 🏡
Goal —- to net $5,000 (monthly)
6. Side hustles / gigs —- just something to keep me engaged and interested— my music 🎶 ministry is doing this now.
Our investment account stands independent and at a healthy seven figures ——. If needed, we will pull from this “NEST EGG” and create more retirement income ——
Cash —- over $350K —- just in case I / we want to buy in to a business or to buy another rental. —- and, it serves as our emergency fund —-
Also, we are pushing to be completely DEBT FREE on the same day that we retire —-
Again, hopefully, we’ll have plenty to live on for the next 30 yrs and hopefully, we’ll have enough to help take care of others – all while leaving a nice amount to our kids and grandkids.
Our Legacy Plan is in place —- we’ve worked for many years to build in all important areas —-
Great post! Right now my streams are, in order of highest share:
– two salaries (wife and I),
– 401k and 403b matches,
– freelance income (writing, other),
– video course royalties,
– blog affiliate income,
– dividends from index investing,
– advertising income,
The course training is pretty great, it pays well when I complete a course (one time fee) and has ongoing royalty payments per course so the more I do, the more that grows.
I am actively working on monetizing a product I have managed for over 5 years that has 4000+ users so I’m very excited by that prospect, I am hoping it becomes the next biggest contributor to my path to FI 🤞
Thanks and keep it up!
Fire Year FIRE escape says
I’ve always felt like its good to try to get good at something rather than spread yourself too thin.
I got really into real estate and now that is my main source of income in retirement. I am also now skilled enough to notice good deals when I see them and know exactly how to act on them.
I could have spent more time on dividend investing but it doesn’t seem worth it to purposefully spread myself around.
Having said that. You don’t want all of your eggs in one basket…unless you really understand that basket.
Ten years ago I lost my “career” position during a company reorganization when my position was eliminated and absorbed by multiple other employees. Since then, I have managed to earn the same or higher income from multiple part-time positions, and I can take summers off.
My main source of dependable income is as a school bus driver. My route is easy and the students are well-behaved. During the school year, I also teach driver education. I set my own schedule and usually drive with students 8-12 hours per week. January through April, I work for a CPA preparing tax returns. I can work at the office or from home. Preparing tax returns creates more value than the paycheck. I manage my money to pay the least amount of tax possible.
I’m also a licensed real estate agent, but my main client is myself. I got a good deal on a fixer upper in February that I’ve been working on. (BTW – every good deal I’ve ever gotten on real estate or autos has been on purchases made in January or February when the weather is raw here in the Midwest). I’m not sure what I’ll do with the fixer upper when I’m finished. I currently have two rentals, but I’m not anxious to add to the rental portfolio.
I especially like the seasonal schedule of my income sources. Just about the time I’m feeling some burnout I get a nice break. I don’t really feel like I’m working, so I guess I don’t need to retire. Eventually, I’ll start eliminating some of the part-time positions until I’m fully retired. The last ten years have been great. I wish I had lost my full-time job sooner.
Mr. Hobo Millionaire says
“Financial Peace” is real folks. Just note the various income streams above. If you can get there, there’s nothing like it. I encourage anyone reading this who does NOT have these multiple levels of income streams to keep working at it. It’s worth it… whatever age you get there.
GenX FIRE says
I do REITs instead of owning property primarily due to the fact that I do not know how to pick homes, and really don’t want to do the work myself. I just don’t have the knowledge. Although, as I type this, I know of family members who do. I am more of a techie planner type, and can carry a paint brush. I wonder if we could set something up. That being said, I have always shied away from mixing money with family. Do you have any thoughts on that?
Aside from that, I spend a lot of time learning and working long hours at my W2. I am paid well, so no complaints, but it does put me in the most of my eggs in one basket situation.
I’m not sure what you’re asking…
Do you want thoughts on working with family or investing in real estate?
Ms FireMum @ A Family on FIRE says
Great stuff! Totally agree with having multiple income streams. Working in IT has clearly influenced how I view ‘single point of failures’ and a single income is definitely one of them.
We aren’t FIRED yet but we have:
1. Income from both mine and hubby’s salaries
2. Rental income from our investment properties
3. Dividends from our share portfolio
4. Income from Ratesetter P2P lending, which I’ve just started
I just got the “normal” streams:
* My Job
* My Wife’s Job
* 401k Match (me + wife)
* Credit Card Rewards
* Cash Back Apps / Programs (eBates, Pei, Bumped)
* High Interest Savings Accounts / CDs (Ally and a local credit union)
Plus a few side hustles:
* T-Shirts, mostly on Amazon
* Occasional surveys (pennies here)
* Blogging (Again, pennies)
I’m also exploring selling vector graphics on a site called NounProject. It’s all digital.
Also, I pick up coins when I find them. Recently found a 1958 wheat penny. Does that count as another income stream?
Hassam Ahmad Awan says
You must have multiple income streams as an entrepreneur! If one if your income streams collapses then you will always have other ones to fall back on while you are rebuilding!