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.”
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’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)?