Millennials need to develop an entrepreneurial spirit in order to succeed in today’s economy. Gone are the days when you could graduate debt-free, get a job with a stable employer, work there for three decades, and retire with a healthy pension.

Today’s workers change jobs every four to five years, and they’re no stranger to layoffs due to budget cuts and downsizing. Full-time continuing employment has been replaced by year-to-year contracts, meaning there’s little chance of latching onto a pension. A good health and benefits package might even be a stretch.

Related: On job security and preparing for the worst

The traditional “emergency fund” meant setting aside 3-6 months worth of expenses to get you through a long period of unemployment. In real terms that meant having $10,000 – $20,000 cash sitting there earning next to nothing in interest.

Why Multiple Income Streams Is A Better Emergency Fund For Millennials

Building multiple income streams

But a better way for Millennials to combat the threat of job loss – or job uncertainty – is to build up multiple income streams outside of their traditional day job. Think of how much you’d need in terms of a traditional emergency fund and aim to bring in that amount each month.

Say, for example, your family could get by on $2,500 per month if you were in a pinch. That means taking care of the bare essentials like your rent or mortgage, plus utilities, insurance, gas to get around, and putting food on the table.

Could you find a way to earn $2,500 per month on the side? In the TV series, Til Debt Do Us Part, host Gail Vaz Oxlade will dissect a couple’s budget and often ask them to find ways to earn more money.

Related: What will it take for you to save more this year?

Examples include freelance writing or photography, building websites for small businesses, lawn care and snow removal, tutoring, selling for an MLM company like Avon, doing manicures/pedicures or running a hair salon from home, offering home or commercial cleaning services, and doing odd construction jobs. The list goes on.

A more passive approach might involve renting out your basement or another room in your house. Sean Cooper, a 30-year-old pension analyst from Toronto, will be mortgage-free later this year thanks in part to his multiple sources of income, including renting out the upstairs of his 3-bedroom bungalow to a family for $1,550 per month.

Read Sean’s story about becoming mortgage-free here

It’s unlikely that Generation X or Y will be able to retire at 55 with a full pension. Following the traditional path of our parents and grandparents will more than likely lead to us working until we’re 70.

Gail Vaz Oxlade’s case studies on TV, and Sean’s journey to mortgage freedom, might sound extreme to some. But the point they’re trying to make is that you can accomplish your financial goals with a bit of hard work and ingenuity. Getting out from under a mountain of debt, paying off your mortgage in five years, or reaching financial independence in your 40s is possible.

Final thoughts

In our case, a healthy side business involves running two blogs, doing some freelance writing for several online publications, and offering fee-only financial planning. The income that I earn outside my day job allows my wife to stay home full-time to look after our young family while still meeting our savings goals.

By developing multiple income streams now, Millennials can protect themselves against future job loss. And by saving that money, as opposed to just increasing your lifestyle, you’ll fast track your financial goals.

You’d be surprised how quickly you can accomplish your goals when you can earn an extra $1,000 or more per month.

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10 Comments

  1. Steve Boyko on June 7, 2015 at 3:36 pm

    I agree, millennials, and everyone else for that matter, will have to get used to the idea that the days of working your entire career at one company are over… flexibility is the key.

  2. Barry @ Moneywehave on June 7, 2015 at 8:36 pm

    As someone who works in an industry that is slowly dying, I could not agree more. I’ve been able to slowly build my side income, and who knows what will come of it. The one major positive I’ve found since freelancing is realizing I have much more skills than what I do at my day job.

    • Echo on June 8, 2015 at 9:29 am

      Hi Barry, that’s a great point about discovering your hidden talents. While it’s doubtful that a side gig will ever replace full-time income, it can allow you to pursue your passion with little to no downside risk. And if you’re not getting fulfilment from your day job, making money doing something you enjoy on the side can be a great release.

  3. Emma on June 8, 2015 at 5:27 am

    I agree, but a couple of points… 1) A job loss isn’t the only thing you need an emergency fund for. If you aren’t able to work (illness, disability or caregiving), then having multiple jobs is irrelevant. You can use the extra income to build a healthy emergency fund, but you can’t do without an emergency fund altogether.

    2) What about burnout and a work/life balance? If you don’t have a partner to pick up the slack, it can be difficult juggling all that work and not falling into unhealthy habits or being completely anti-social. (I’ve been there, done that!) Multiple jobs is tough on singletons. (And please no one say that because we’re single, we have so much more free time than couples with kids. It’s not that easy, trust me.)

    • Young Millennial on June 8, 2015 at 6:38 am

      I completely agree on the multiple streams. It is much easier these days to start an online side gig like a blog, or even make an app, from the comfort of your own home. On the other hand, millennials have a lot more distractions to get in the way.

      I found that it was easier to work on multiple jobs when I was single. I was able to come home when I wanted do nothing else but work in a quiet environment. That said, it does get lonely and you start feeling a little burnt out.

      When there are two or more people, you have little control over the environment and there are always distractions.

  4. Michael James on June 8, 2015 at 9:05 am

    Finding a side gig that pays $30,000 per year is great for someone energetic and talented enough to do it. But realistically, extremely few people could do this on top of full-time work. The vast majority of people will never have side gigs that pay a significant amount. These people should be building emergency funds.

  5. Dan @ Our Big Fat Wallet on June 8, 2015 at 6:54 pm

    Robb, you’re a machine. Not sure how you can fit all that in plus working full time. A side income can definitely help and like anything else, more diversified income streams means less risk

  6. Stephen @ HowToSaveMoney.ca on June 9, 2015 at 5:01 pm

    This is an interesting concept. I’m definitely a fan of multiple revenue streams, I’m just not sure that everyone can effectively do it. You certainly have to keep work/life balance in mind when attempting this. Having a side gig has definitely taken its toll on my mental health and family life in a family with 2 young kids and 2 parents working demanding jobs.

    If you can swing it, do it though, especially before you start a family!

  7. Smart Money MD on June 13, 2015 at 4:17 pm

    I second this. Yes, it’s great to be employed and to have a stable job, but no matter how great your job is, you can be laid off. Having alternative income streams, no matter how small, and help prepare you for alternative means of income. In case, you do lose your primary job, you can still continue your side hustles while looking for a new job.

    Who knows, maybe your secondary means of income becomes so enjoyable or even lucrative enough that you change careers?

  8. TheMoneyLibrary on June 13, 2015 at 9:51 pm

    I agree that in today’s world there is no such thing as job security. This is why it’s so important to have something part time that could potentially turn into a full time job if needed. Entrepreneurship is a critical aspect to being financially independent, but not everyone is cut out to be an entrepreneur.

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