3 Benefits of a Second Income Stream

If the income from your job isn’t cutting it or you’re looking for way to get ahead financially, adding a second income stream may be a solution. A second income stream, it’s from a second job, a money-making hobby, or a side business, can benefit you in more ways than one.

It’s easier to afford your living expenses.

More than 50% of Americans are spending at or above their income on living expenses, reports CNN. If you fall into that statistic, no doubt you sometimes have trouble making ends met. You may have to borrow money or dip into savings to make sure you can afford everything. While you may be able to survive like this, it’s hard to get ahead if you’re spending all your money to live.

A second income stream can create some breathing room in your budget, even if it’s just a few hundred extra bucks each month. Make sure, however, that you don’t take on more expenses as you start earning more money.

You can catch up on past due bills.

When your paycheck is stretched, it’s easy to fall behind on your payments. Many people are perpetually one month behind on a bill or two – paying only the past due amount each month. Increasing your income by making money from a second job, hobby, or side business can help you catch up, stay current, and avoid late payments and damage to your credit.

You can put money in savings.

Without money in a savings account, you’re only one emergency away from a financial disaster. Think about what would happen if you needed a major car repair (or have to purchase a new car all together), you have to replace or repair or replace major appliance, or you have a major medical expense that’s not covered by insurance?

Once you’re caught up on past due bills, the money from a second income stream can be used to build an emergency fund. While the ideal emergency fund is several months of living expenses, even $1,000 in savings can help you deal with many small financial emergencies.

Can you quit your day job?

With the right idea, enough time, and the right strategy, your second income stream could grow enough that it can become your primary income. If you’ve ever dreamed of being your own boss and running your own business, creating a second income stream is a good place to start. Of course, you don’t have to leave your job, even if your side hustle grows. Not everyone wants to leave the workforce to run their own businesses, so if that’s not appealing to you, that’s ok too.

Keep in mind there may be some tax implications as you make money from a hobby or side business. Talk to an accountant or other tax professional to find out the additional income will impact your taxes.