Where does your money come from?
If your answer is ‘my job’ or ‘my business’ and that’s it, this article is for you my friend. I’m sharing why creating multiple streams of income is a wealth-building system with big advantages.
I’m not going to sugarcoat it, creating multiple income sources takes work, especially in the beginning. It’s definitely not a short-term strategy but with time, the financial rewards of creating various sources of income are worth your time and attention.
Types of income streams
There are two different types of income streams – active and passive income.
Active income: You earn active income by trading time for money; for example, a salaried position, hourly work, a side hustle business, commissioned income, etc. The idea is to supplement your main source of active income with another either passive or active source.
Passive income: Now this is the holy grail of income, and no, it’s not a pipe dream. It’s earned passively, meaning after an initial investment of time and effort, you receive income without actively working for it.
Basically, you continue to get paid after the bulk of the work is done.
Examples of passive income include some real estate investments, royalties, dividend stocks, interest income, some online businesses, peer to peer lending, and the sale of digital products (ebooks/courses etc)
The secret to really accelerating your wealth building? Using surplus cash from active income streams to create passive income. More on that in a moment.
Benefits of multiple income streams
Some people bring in a substantial amount from one extra income stream, but it’s probably more common to have a few different, smaller income streams coming in. Either way, there are big benefits!
Pay off debt faster
If you’re dealing with debt that your regular income can’t seem to make much of a dent in, creating another income stream will make a big difference.
You can allocate all that secondary income just for debt repayments and get debt free much quicker than relying on a portion of your usual paycheck alone.
Keep that income stream going after you’ve paid off the debt and you can begin to invest the money instead. This brings me to my next point…
Allow you to invest more
Using multiple income streams to invest is where the wealth-building magic really happens.
Let’s say you have a regular 9-5 or business that comfortably covers your current living costs but there’s a limit to how much you can put aside for investing; without it compromising other expenses.
So, you decide to drive for Uber on the weekends and commit to investing all Uber earnings into various dividend-paying stocks. This may not be an option if you are a business owner, so the importance of passive income streams is even more important.
While it takes effort and time to earn your Uber dollars (active income) you’re investing it to build a passive income. Long after you stop picking up passengers on a Saturday night, the money you earned will still be working for you.
Help you stay afloat during unexpected job loss
If you lost your job tomorrow, would you lose your only source of income? That could be a scary thought for many people, especially those without a well-stocked emergency fund.
Having more than one source of income can make the unexpected loss of a job easier to weather. Even if your secondary income streams don’t cover all expenses, having some passive income can make you more secure by helping pay the essential bills.
An unexpected job loss is often the catalyst for people to focus on creating additional income streams…but why wait? Start now!
You’ll have more options in retirement
For many retirees, the reality is that their employer-funded retirement portfolio will shrink or hold steady in retirement, rather than grow.
Having various ways to create revenue, even after you’ve officially clocked out of the 9-5 world, means you won’t need to rely only on drawing from your employer-funded retirement portfolio.
You won’t be so reliant on the government pension either and unlike the pension, you actually have control over growing and creating multiple income streams.
And for my business owners, some more bad news…Less than 5% of businesses are saleable or sell! Don’t wait until it is too late to build your wealth outside of your business.
Boost your fun money slush fund
Extra income streams don’t need to be earning you thousands of extra dollars a month to be worthwhile.
Even earning an extra $100 or $500 a month on top of your primary income can allow you to build up a fun money slush fund for those occasional splurges and treats.
A word of warning on creating multiple income streams
The more income streams you can create, the more financial security you’ll build for yourself and supercharge wealth creation.
However, we know that financial success results from focusing your attention on a specific outcome.
If you don’t have any additional income streams at the moment and feel inspired to get started, don’t rush out to try and create 10 different income streams at once.
Building multiple income streams is a little like building your own personal conglomerate and it takes a lot of work. The wrong way to go about it is trying to do everything at once; launch a side hustle business, buy your first real estate investment, and get started in the stock market all in a month!
Don’t try to run before you can walk – focus on cultivating one additional income stream, to begin with. When it’s up and running put systems, schedules, and tools in place to help it tick along while you move to create the next stream.
Think about taking the base skills you’ve learned in that first stream, and transferring those skills to create additional streams.
Do you need to have seven or more like some millionaires do? Nope, it’s completely up to you! Even adding one additional income stream will speed up your journey to financial independence.
The key is to add income streams one by one and enjoy the process of securing your wealth as each new income stream kicks off.
If you are ready to get started growing your wealth and building your secure financial future, claim your no-cost Smart Investor coaching call. Just click the link here and find a time that works for you.