Have you ever had a side hustle or stream of income that wasn’t too significant? It might have brought in a few bucks here and there or the cash flow might have been lumpy.
Well, I have that problem (well, if you could call having income a “problem” haha).
I have a few different sources of income that routinely bring in less than $50 a month. What should you do when a situation like that comes up?
Should you care about small income streams?
I’m a firm believer in diversifying income as much as possible. I’d rather have 5 side hustles that make $1,000 a month than one side hustle that makes $5,000 a month.
As I said before, in general, it takes 5 – 6 different streams of income to retire.
Right now, I have a few income streams that bring in less than $50 a month.
These passive income streams include:
- My Merch by Amazon t-shirt account, which brings in less than $10 a month.
- A failed Amazon niche site that brings in around $40 – $50 a month
- A very old website from a few years ago that makes about $10 a month in adsense revenue.
So a big question is what should you do with these small income streams. In general, if the income stream is passive, I would suggest just letting it ride (as long as the income covers the expenses).
However, even passive income streams do require maintenance work once in a while. Try using this exercise: estimate an hourly wage of the maintenance work and the income stream.
In the case of my failed Amazon niche site, the small business makes enough to cover the hosting and domain name fees and then some. It’s not a lot, but it’s still another source of passive income coming in!
The value of small passive income streams
The value of multiple small sources of passive income streams is actually a lot more valuable than you would think.
Let’s say you have six or seven sources of income that collectively bring in $1,000 a month of income. That turns out to be $12,000 a year.
A good high quality dividend portfolio should yield at least 3.0% annually. So, to match that level of passive income, you would need a dividend portfolio of $400,000!
In other words, your $1,000 a month passive income stream is the same thing as having $400,000 invested in a dividend portfolio that yields 3.0%.
This means you don’t have to save up as much capital to invest in stocks or real estate or other passive income streams to retire!
I think this is a very useful exercise to pursue when looking at your smaller income streams.
Don’t scoff at seemingly small sources of income. Collectively, they could be worth a lot more than you think!
How to use small income streams to make big money
One thing I like to do with my small passive income streams is to try to make them into bigger streams of income.
One way to accomplish this is to invest in high risk, high reward speculative investments. As I have written in the past, even investing a small amount of money into speculative investments can reap great gains.
As long as you are keeping the allocation small, there should be no permanent damage to your long-term net worth.
Let’s say you make $50 a month selling on Etsy. You could take that money and invest it into Bitcoin or some kind of cryptocurrency.
If it pays off, you could triple or quadruple your money in a year! And if it doesn’t work out, that’s fine. It was only $50 a month.
Even if speculative investments aren’t your thing, rolling them into safer investments is also a smart idea. Investing $50 a month into dividend paying stocks can yield great results over the years.
Allocating small income streams for purchases
Another thing I like to do is use small income streams to fund my hobbies and disposable purchases.
I think it’s a great way to reward yourself with something small without over-indulging. After all, we work hard for our money, might as well enjoy it!
I use some of my small income streams to try new Tequila (I’m a big tequila fanatic). In addition, I also use these income streams to get new clothes or buy gifts for friends and family.
It’s nothing fancy or expensive, but it can still make a difference! Having an additional $50 a month in spending money could be the difference between a few meals out or a PB&J sandwich!
While small income streams may seem…well small, they can actually make a big difference in your life. Even small income streams can add up to something meaningful collectively.
Readers, do any of you also generate seemingly small sources of passive income? What do you do with that money? Let me know in the comments below!