One thing that most of the world thinks is the riskiest is
being self-employed. People often reject
the notion of entrepreneurship because it’s scary!
What if I don’t get any customers? What if my idea isn’t any good? What if…
On the other hand, employment with a good company is often seen
as the most stable of all. People like
to get a nice salary with nice benefits.
Sit at a nice desk or in an office.
Maybe even get free coffee and people to talk to and collaborate with. It’s an idyllic picture for many.
Yet that may be the riskiest of all.
As with many things in finance, the idea of diversification
is related to risk – or at least the reduction thereof. People talk about diversifying investments so
when one zigs, the other zags (in theory anyway). Or people can diversify tax treatment of
their money – taxable, tax deferred, and tax free. Don’t put all of your eggs in one basket!
When it comes to income, most don’t diversify. But think about this – as an employee, you
are selling your knowledge and skills to one customer – your employer. And when that customer finds someone else or
no longer has a need for your knowledge and skills, then you lose that customer
– and your income!
Instead, the self employed may have multiple customers, and
when one leaves, there are still others.
It may be a shock, but you still have something.
As such, I am a major proponent of side gigs – having a
little side business or income generating hobby. Not necessarily to get rich, but it’s nice to
have a little extra coming in each month to help with the bills or build up
savings.
From a personal finance perspective, that could mean paying
down faster or building savings faster.
Or the extra money could mean a big family vacation without having to
cut back on current lifestyle.
Need some ideas? Check
out this article. Some of these even
look easy and fun.
The main question is – how many ‘customers’ do you want to
have?
