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Just as your 1st income source does
Your second income source should cover all of your bills, not partial.
Of course, having multiple partial income sources is helpful, but a more financially powerful move is to ensure your second income source can cover all of your expenses as your primary income source does.
Why Should You Do This?
Well, let’s say you lose your primary source of income.
If you have another primary source of income, you’ll essentially be unaffected – if you’re only living on one income.
What would be affected is your savings/investment or spending rate – depending on how you’re utilizing that additional income source.
Secondary Income Should = Full-Time Income
When people think about maintaining multiple income sources, they frequently think of “part-time” gigs or “supplemental income,” which is precisely how I used to think as well.
If I didn’t have an emergency fund, I would not have felt comfortable enough to lose or leave a job.
But I could’ve increased my confidence by maintaining additional primary income sources that equaled my expense load.
If you think about it, having a part-time gig – with an emergency fund – still doesn’t create economic immunity for you because most part-time gigs don’t cover all of your expenses, which is why most people require full-time income.
Who is the financially stronger couple:
Option A: Each person has two incomes that cover their entire expense load, with no extra left over.
Option B: Each person has one income that covers their entire expense load, with no extra left over.
Who is the financially stronger person:
Option A: The person has two incomes that cover their entire expense load, with no extra left over.
Option B: The person has one income that covers their entire expense load, with no extra left over.
Option A in both instances is stronger.
If Option A couple or person loses their jobs, not only will they avoid having to rush to replace their income, but they can avoid adding debt, experience more peace of mind, and still move forward financially.
Ever notice how a loss of income can set you back financially because you run out of money, have to use your credit card more frequently, take out loans, or pause investing?
When you have more than one primary income source, you can avoid all of the financial setbacks people frequently experience.
Continue Plan B
Maintain multiple additional income sources that cover your expenses, which many people do.
But if you keep your expenses low enough, creating additional income sources that each cover all of your expenses shouldn’t be too tedious.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.