Sometimes a second source of income can give you some more financial freedom. If you are thinking about diversifying your income, you may be wondering where to start. It may not be as difficult as you think. The goal is to maximize your potential in the revenue streams available to you.

It is wise to use your primary wages to invest. Ideally, you will maximize your primary salary to generate cash flow to support secondary income streams. Also, keep in mind that it is best to have another person to bounce ideas off of and tell you if you get off track.

You can diversify your income in various ways. It does require some extra time and energy to deepen your income portfolio, but it is not as complicated as some people assume. You can work at your job and invest any excess income in a way that best works for you and your lifestyle.

Here are some of the widely recognized additional sources of income:

Rental Property

Purchasing a rental property is a common way that individuals generate an income stream, and it really works. You buy a property, and the property returns a cash flow through rent. You will be responsible for things such as a mortgage, utilities, property taxes, insurance etc., so you must take this into account when calculating a return on rental property. Luckily, going down the rental property route does come with tax advantages. The problem with rental property is that it can be challenging to get that initial capital required to get started. Even if you don’t have money for a down payment to purchase an income property, there are ways to do this, such as getting started with real estate crowdfunding, allowing you to become a limited owner in real estate for a smaller amount of money.

Side/Hobby Business

Another popular way to develop a second source of income is to create a side business. Whether it be online or offline, it can also be considered a side hustle or a hobby business since it typically relates to the owner’s hobby. Those who are tech-savvy or enjoy working online may be compelled to sell on eBay, Amazon, or create a website. You can even promote your services through a site like Fiverr. You can launch a service business like dinner catering, freelance writing, or online marketing by creating a solid outreach e-mail. You can get yourself up and running in just a few days. Those who work better offline can also host parties to sell things like candles, makeup jewelry, or clothing.

Launch an Online Resource

You can share your expertise by launching an e-book or course to help others while you earn passive income. It can be a lot of up-front work, but once it is out there, it likely takes minimal effort to maintain. If writing e-books isn’t something you are interested in, you can also go the video course route or host a boot camp.

Leverage the Sharing Economy

You can rent out your spare bedroom on Airbnb, your car on Turo, camera equipment just lying around your house on Cameralends, or your snowboard or bike on Spinlister. If you are considering using Airbnb, your revenue can skyrocket by renting out your entire house, and you can use the opportunity to take a vacation.

As attractive as a second source of income sounds, it’s important to do your homework when it comes to protecting yourself and your assets. Just like any other major decision, you should make sure that you understand the risks fully!

Learn more about Bryn Mawr Trust.