The Millennial and Post-Millennial generations are known for their resilience, technological proficiency and adaptability, and the hunger to better themselves.

With the growing use of the internet amid modernization, almost every piece of information is in the palm of their hands. This has made it easier for them to have access to opportunities to grow their income.

Among the countless articles on the internet talking about increasing your income and managing your finances, how can you know what steps to take on your journey to success?

Here’s a list of how 18-23 year-olds can effectively manage their personal finances through exploring multiple income sources:

1. Do Tons of Research

There are numerous tutorials from gurus on the internet nowadays that tackle many different income sources and how to make the best of them. The only challenge is distinguishing all the information that is actually relevant, updated, and useful.

One key is checking references and reviews. Explore videos, podcasts, articles, books as well before diving into a new source of income.

For example, to secure profit in stock investment, you must keep yourself updated with the increase and decrease of the stocks you invested in so you would know when and how to pull out your money and where to invest it for more profit.

2. Identifying Effective Income Streams for You

Manoj Arora, a blogger on LinkedIn, indicated the seven income sources common in millionaires in his article: Earned income, profit income, interest income, dividend income, rental income, capital gains, and residual and royalty income.

Creating multiple income sources is one huge step to financial stability. Diversified cash flow sources give you allowance even if one of the income streams dries up.

One of the income sources post-Millennials are engaging themselves with is active income in the form of side hustles with a regular job.

Active Income

Active income comes from being paid for the services you perform. This includes salaries, wages, commissions, among others. It could either be a regular 9-5 job or a side hustle, which is becoming more and more popular among post-Millennials today.

According to Bankrate’s 2018 survey, nearly 4 in 10 Americans have a side job (about 37% of the population). Post-Millennials were more likely to have a side hustle than other generations.

The most common side hustles indicated by another Bankrate’s survey include home repair, online sales, crafts, and childcare. Online freelance jobs are also getting more popular these days, such as content writing, managing social media, blogging, and more.

Moreover, Post-Millennials often engage in multiple jobs to supply their lifestyle and pay off debt. The downside of active income is that it requires a lot of time to get compensated. The good thing is, there are other sources of income that don’t require you to put in the effort all the time for you to make a significant profit.

Passive Income and Portfolio Income

Passive income includes earnings from a source other than an employer or a contractor. It requires little to no effort to profit and maintain. The most common examples of this type of income source are rental income and stock investments.

Portfolio income, on the other hand, is income from investments, dividends, interest, and capital gains.

Dividend Stocks

Investing in a dividend stock means that you are paid a portion of the company’s earnings with every share of it that you own. This is a good source of long-term income.

So, instead of buying fast food and spending money on luxurious bags or clothes, you might want to think about investing in stocks first.

Starting an Online Store

Starting an online store nowadays is very easy, and with the right products and enough promotion, profit is guaranteed. One wise way of buy-and-sell strategies is flipping products on e-Bay, as demonstrated by the famous entrepreneur and content creator Gary Vee in his Youtube video series called ‘Trash Talks.’

In Gary’s videos, he is seen fishing at multiple garage sales for authentic toys, mugs, and other items sold as low as $0.50 and are worth $10-$30 when posted on e-Bay.

Real Estate

Rental income with real estate is one of the most common sources of passive income. If you own a house with an unused room, you can sublet it for extra income. If you find a trustworthy tenant, it’s one of the easiest sources of extra bucks.

Blue Chip Stocks

A blue-chip stock is a vast company that is well-established, financially sound, and with a good reputation, such as IBM Corp. and Coca-Cola Co. Investing in blue-chip stocks is similar to dividend stocks investment wherein each investor is paid through dividends. This kind of investment is a huge step for your financial stability. So you must always observe and study the performance of the company you are eyeing to invest in before investing your money.

Roth IRA

A Roth Individual Retirement Account (Roth IRA) allows qualified withdrawals on a tax-free basis, given that certain conditions are satisfied. Investing in Roth IRA as early as possible is one of the best ways to save for your retirement.

Financial Minimalism

Financial minimalism is simply making the best of what you have and not spending more than you make and save. If you reside in your parents’ house, you can save up since you do not have to pay for food, shelter, or utility bills.

You can opt for clothes, bags, and shoes that look classy but are not necessarily luxurious. The key to a financially minimalist lifestyle is distinguishing your needs and wants and allocating your income accordingly.

Building Credit

You might think that having loans mean that you can’t manage your expenses, and therefore paint a bad image in your mind. However, establishing credit signifies more than just beginning your credit history by obtaining a loan or credit line.

It is accompanied by maintaining a good record on your loans. For example, opening a credit card account would make you eligible for exclusive rewards and promos. Additionally, establishing good credit will let you maximize those benefits, including a bigger credit limit.

However, when maintaining different sources of income, you must always be aware of taxes such as capital gains tax and income tax: how, when, and how much you have to pay.

For income taxes, you must know which of your income streams are chargeable and non-chargeable, depending on your state’s laws. On the other hand, capital gain taxes are charged on the profit of the property or investment that you sold.

3. Get Involved as Early as Possible

Managing personal finances usually start when you move out of your parents’ house. This doesn’t mean that learning how to diversify your income begins there, too.

Financial stability is a crucial part of independence. Getting involved through studying all about stocks and investments, exploring how you can earn extra cash, and engaging with entrepreneurs will serve as a good start.

Beginning your efforts towards financial literacy as early as you can give you significant leverage against your peers since this is not explicitly taught in schools despite being one of the vital skills you need to thrive and succeed in life.

4. Explore Budgeting Techniques

Having diverse income sources would mean nothing if you can’t budget them. One of the challenges of increased income is the increase in the cost of living. If you increase your expenses as your income increases, you would not be able to save a dime.

Learning the budget technique that is perfect for you will help you save more and better. Budget plans like the 50/30/20 budget will help you manage your finances better as well. Another common way to save better is subtracting savings before expenses from your income.

5. Create an emergency fund

Aside from savings, you should also set a portion of your income aside for your emergency fund. An emergency fund is crucial for unexpected expenses. This is so you would not drain your savings unnecessarily.

Takeaway

Remember that each income stream takes years to build up. You control where and how you allocate and invest the money you earn. Hard work, perseverance, resilience, patience, and self-discipline are key qualities you should hone, accompanying your income sources, set yourself towards success.

Looking to add income to your current finance? Read ”The 5 Best Investments to Make in 2021” to learn more.