The Importance of Multiple Streams of Income

As high-income earners, physicians can easily forget the importance of multiple income streams.  Diversifying the ways in which you accumulate wealth is vitally important.  Despite the fact that the vast majority of households around the world rely on a solitary stream of income, this is no way to plan for the unexpected. 

With this article, I seek to explain why growing and maintaining multiple streams of income is important for your wealth accumulation as well as your ability to expedite financial independence.  From the creation of an emergency fund to guarding against preventable risk, I hope to convince you to diversify your income.  Let us start with the basics. 

Build and maintain an emergency fund

At this point I should almost have a section I ‘copy and paste’ to the top of each post!  I feel like a broken record starting so many articles with ‘get an emergency fund you idiot!’  However, I beat this dead horse because I find it critically important to insuring against the unexpected.

An emergency fund is an insurance policy (so to speak) against a myriad of different financial pressures.  Ideally, each and every individual would have approximately 3-6 months living expenses saved in a liquid location.  This fund is strictly for emergencies. 

Figure out your needs

As I have written about previously (see link below), your first step is to create an honest and transparent budget.  This budget should house every expense you make on a day-to-day basis.  This allows you to review your expenses at month’s end, and understand where your cash is going.  From here you should be able to calculate what one month’s living expenses truly costs.  Is it honest?  Did you make sure to include every last little expense?  If you did, then multiply that by three.  That is three months living expenses.  That should be your starting goal for an emergency fund. 

Before we can even begin to discuss multiple streams of income, we need to guard against financial catastrophe.  I have previously written a post on why an Emergency Fund Should be Your First Financial Goal.  I highly suggest reading that article to further understand the purpose and utilization of an emergency fund.

Last thing before we move on, I have another great post on How to Write a Financial Plan.  This too is educational in regards to the importance of an emergency fund.   It also seeks to demonstrate why having a well written roadmap for your financial goals will keep you motivated and accountable.  Give it a read!

Guard against unexpected changes

Another reason that prioritizing multiple streams of income is important, is that long term it can help you guard against unexpected changes.  Now, you may be reading that last sentence and think… isn’t that the exact purpose of an emergency fund?  You would be correct…in a sense. 

See, an emergency fund is helpful on the short term.  Some see the emergency fund akin to a short-term disability fund.  If you are pregnant (unfortunately still seen as a short-term disability to some employers) you may not get offered paid leave.  In these scenarios, if you don’t have the financial buffer to leave your job (unpaid) for three months, then an emergency fund is a finite amount of money saved for this particular scenario.  Another close example is unemployment, expected or unexpected.

However, where having multiple streams of income differs is that (continuing the pregnancy scenario above) you may now be able to leave your job temporarily while still bringing in revenue from other sources.  This is important because you become less reliant on your personal income. 

When you receive compensation from various sources, you develop a buffer against mishap in any one source.  If your rental property goes unfilled for a prolonged duration, this is less of an issue because your primary income and your significant other’s continues to flow.  You are better protected. 

This leads me into my next point.

Depend less on your day job

Your day job is an incredibly important part of your life.  For many, you may change jobs a few times, but for the most part you will work in your profession for the majority of your life.  For those of you who are ‘head-over-heels’ for your jobs, this is great!  However, many see their jobs as a means to an end.  We work to put food on our plate.  However, if you have built multiple streams of income then you get the option to be less reliant on your day job for continued sustenance. 

Speaking personally, I love what I do.  I am a pulmonary and critical care physician.  During the COVID-19 pandemic I viewed working on the front lines as a badge of honor.  However, that badge of honor carries a deceivingly heavy weight.  The pandemic lead to long hours.  Further, the hours worked were more intense.  Everyone had life-threatening lung injury, was on the ventilator, and actively dying. 

The road to burnout

I spent an endless number of days discussing end-of-life care on countless individuals.  It was taxing… it wore me down.  Even now, as I sit and write this, I know I have come close to burnout.  The idea of multiple streams of income can help dampen the blow of stressful job demands. 

With the advent of this website, The Motivated M.D., I vowed that I would use writing as an outlet for my emotions and also to create a digital product that (one day…) I would be able to generate income from.  Now I am only in the infancy of my blogging career, but I am already meeting one goal with this site.  Every time I sit down, I write about financial goals, trajectory, education, and independence.  Thinking long-term, my hope is to serve my first goal with this website (emotional outlet) while building a nest egg for future income (monetization). 

I want to create an environment where I work because I enjoy what I do and because I want to…not because I have to.  Multiple streams of income can do this for you. 

Another great segue onward…

Expedite financial independence

The last thing to touch on is how creating multiple streams of income can help you expedite your financial independence.  In keeping with the mission of The Motivated M.D., I seek to provide content that helps readers reach financial independence.  Creating multiple streams of income can do just that.

As mentioned above, if you are like me, you want to position yourself where work is a choice.  I love what I do, but I want to work because it brings me joy (and supplements income) not because I have to for survival.

Financial independence can take many forms.  Financial independence can be ridding yourself of debt.  It can be having enough to retire, but live minimally (‘thin’ financial independence).  Or perhaps you have built an immense amount of revenue from multiple streams of income and it has led to the ability to retire with excess (‘fat’ financial independence).  The possibilities are endless.

What I can guarantee you is that by building and nurturing multiple streams of revenue, you will create options for yourself and your career that you wouldn’t have otherwise.  Maybe you can take a job with more flexible hours, even it means sacrificing a portion of your salary.  Maybe it means that you can transition to working part time.  My hope is that, in the least, it provides a reprieve from the financial anxieties of the future.  

Types of income streams

Now to the meat of the post.  We previously reviewed the reasons cultivating multiple streams of income are important.  It can help build wealth, boost quality of life, and lower anxiety.  It can further allow you to focus on what matters.  With that out of the way, I wanted to touch on some common ways to diversify revenue streams. 

Your primary income

The first form of income is likely the most obvious.  Your current career will be your initial form of income.  The Motivated M.D. tends to primarily target high income healthcare professionals.  That said, this advice is for all-comers.  Your primary profession will likely be your largest revenue stream, at least initially. 

For many, your primary income tends to keep your budget afloat.  Your career will likely dictate your ability to pursue other methods of income generation.  It is important to make a distinction here.  Yes, this post concerns diversifying your income, but your career should still take precedent until you have confidence in your other income streams.  What you do not want to do is focus too much time pursuing other monetary endeavors while threatening the continuity of your current career. 

Your primary income will likely be how you support your family, how you receive your healthcare benefits, and how you build retirement savings.  Make sure this stream of income gets the attention it deserves.  For my physician colleagues, this means continuing to stay up-to-date with evidence-based medicine, continuing medical education, etc.  Don’t take your eye off the prize. 

Spousal income

(To readers who are single or do not have a significant other, this section may not be applicable to you currently)

Another stream of income that may seem intuitive is spousal income.  Not everyone will benefit from a household with a significant other who brings in pay. Many have significant others who stay home for childcare purposes.  Many others may be in a position with enough financial stability that your spouse doesn’t need to be employed.  Others may be unable to work for a myriad of other reasons.  However, for those spouses with income generation, this can be pivotal for expediting financial freedom. 

Spousal income can offer a buffer when unforeseen financial mishaps occur.  Is your practice in the red and your salary is suffering because of it?  Are you recently unemployed?  These scenarios are all-too-real.  An emergency fund can help protect to an extent, but if you can have a spouse who continues to bring in income, this can drastically alleviate the anxiety that comes with personal financial disaster. 

Investments

Investments are also income generating.  Whether through retirement accounts or personal investing, stock markets generally create revenue long-term.  Now investments are more complicated as the markets do offer a component of volatility.  For the working class, rarely is there an individual who is able to turn a profit from day trading.  More often, your best bet is to index the market using index funds.

No matter what your approach to investing is, the best advice is to ‘let compounding interest work for you.’  Make a habit of investing with regularity…and then not touching it.  That money needs time to let the miracles of compounding interest work for you.  I previously wrote a post on Common Sense Principles for Building Wealth.  Here I argue that to fully optimize the benefits of investing, it needs to be effortless.  Automating deposits into your investment accounts is a way to ‘pay yourself first.’ 

Getting in the habit of ‘paying yourself first’ is vital to wealth accumulation long term.  You know what else is vital to wealth accumulation long term?  Investing.  If you have the ability to save, save in an account that benefits from compounding interest. 

The S&P 500 Index has returned a historic 10.5% annually since its inception in 1957.  Just to put that into perspective, my wife and I place $500 into our investing accounts (this is separate from our retirement accounts) each month.  To date, we have approximately $30,000 already invested.  If we continue to invest $500 monthly (at an assumed rate of 10.5% compounded annually) in 30 years it will be approximately $1,685,065.67!

Play around with this compounding interest calculator and discover what is possible with dedicated investments, time, and the miracle that is compounding interest.

Real estate

Investing in real estate can be another great way to bring in multiple streams of income.  Real estate can be owned in multiple ways.  These range from owning and operating a rental property, house flipping, Real Estate Investment Trust (REIT), the list goes on…  No matter what your method of real estate investing, it can be quite lucrative and often offers a high return on investment (ROI). 

That being said, real estate often requires a high upfront cost.  You likely need an opportunity fund or large amount of cash to purchase a property, get a mortgage, or invest in a REIT.  This sometimes can be a barrier to entry. 

Real estate is not something that I have had the opportunity to delve into too much personally.  There are, however, ample physicians and individuals alike who use real estate as an early means of supplemental income generation. 

The White Coat Investor wrote a comprehensive article called Real Estate Investing 101.  If you are interested in learning more on real estate investing, it is worth a read.

Blogging

Now here is a topic I feel well versed in.  Like some of the income generating ideas that follow, blogging can be monetized if you have enough of a following.  I started creating online content (blogging) in 2021.  Initially writing about my personal finance journey was strictly for therapeutic purposes.  Writing served as an outlet to get my thoughts on paper (e-paper?) and share them with the world.  Overtime, however, traffic started to increase. 

Websites with large volumes of viewer traffic entice advertisers.  The more regular views you receive to your website or blog, the more appealing your website becomes for companies looking to sell products.  Often times, your website can be monetized through the placement of advertisements or affiliate links.  With enough traffic (anywhere from 10,000-25,000 monthly pageviews or more) you can bring in a 4 or 5-figure income.  That is just from ads and affiliate linking alone.  If you sell products on your site these numbers can increase dramatically!

I have previously written a comprehensive post on How to Start a Blog.  I was exhaustive in creating guide that will allow you to find your blogging niche, create valuable content, and recruit traffic!  With that, you will have the option to monetize your audience if you wish.  Blogging can be a very rewarding experience and if you are able to make money from your efforts; that is icing on the cake!

Social media presence

In keeping with the idea of a virtual presence, building a social media following is another way to create income.  Today we are inundated with social media.  Name the last time you were anywhere and didn’t see someone with their nose buried in their phone?  Facebook, Twitter, Instagram, TikTok, Snapchat, all of these have become part of everyday life.  Social media is an incredibly powerful tool for communication and human interaction.  They are ubiquitous. 

Individuals with a large social media following have found ways to monetize their influence just like a well trafficked blog.  Having thousands of followers means your social media accounts are exposed to large swaths of people with regularity.  This is another enticing avenue for advertisers.  People who have a large social media following, also called ‘influencers,’ are able to use their accounts as a platform for advertising goods and services.

Electronic products

Creating and selling electronic products are another great way to generate income.  Electronic products can range from an electronic book (e-book), an educational course (think Masterclass or Skillshare), virtual coaching sessions, electronic apps, and more!  All of these virtual products can be sold for profit and millions of individuals are already doing so. 

With the invention of low-cost electronic readers (Amazon Kindle) it has never been easier to create and sell literature virtually.  If you feel you have something of value to share, put that into words and turn a profit.  Further, if you have a skill you are proficient at, consider documenting how you execute that skill and monetize it on a platform like Masterclass or Skillshare. 

Other products like apps, art, music, and entertainment often require a significant time investment upfront, but if you are well equipped to create these products then try and monetize it!  If you are good at something…never do it for free.

Medical surveys

The last steam of income I will touch regards medical surveys.  I previously wrote a post on how to Make Money with Medical Surveys.  It discusses the inner workings of online medical surveys.  Generally, research companies are looking for board certified/board eligible healthcare workers who are willing to exchange their expertise and time for money. 

Medical surveys range from 5-minute micro-surveys to 60-minute surveys or longer.  The more time and information you are willing to give, the higher the potential reimbursement.  If you are willing to take a telephone interview or provide patients to a study, these companies are more likely to increase pay. 

Check out my tutorial on making money with medical surveys to get started!

Take home points

Cultivating multiple streams of income can seem a daunting prospect, but it doesn’t have to be.  For most, it just takes the acknowledgement that you are already working, saving for retirement, and investing!  You are already diversifying your income to a degree. 

For those wishing to rely less and less on their day job or wanting to expedite their financial independence, then creating other forms of income can be critically important.  I have chosen blogging as an outlet for my writing, but I hope to one day use The Motivated M.D. as a means of supplemental income. 

This journey, like many things in life, requires dedication and an upfront investment of time, money, or both!  I have previously started a series called My Physician Side Hustle.  These posts document my journey creating this site and the hard work it takes to achieve a financial dream!  I hope this post has helped motivate you to create a financial lifestyle that guards against financial uncertainty and improves quality of life.  Take care and as always…

Stay motivated!

The Motivated M.D.

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Standard Disclaimer: None of the information on this website is meant as individualized financial or medical advice.  These posts may contain affiliate links.