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Why and How To Create
Multiple Streams of Income

Earning | 2021-11-26

The average millionaire has seven streams of income whereas most “average” people have one, maybe two. That’s no coincidence. If your goal is to live a financially secure life, elevated from generations past, you’ll need to intentionally create additional streams of income. There are two types of income, passive and active. Most people go to work every day, an activity that requires them to be actively engaged in some level of productivity in order to be paid. Fewer people have passive income, which consists of distributions from an activity they did once and continue to earn money from.

Why You Need Multiple Streams of Income

A stronger level of security and stability is found with diversification. Just as you wouldn’t be advised to invest all your money into a single fund, it’s not recommended to rely on a single source of income.

In general, people believe that employment equals stability. Earning active income from an employer requires attendance and day-to-day attention in exchange for a paycheck. The truth is, anything can happen - on the employer or employee’s side of things. Layoffs, firings, hirings, conflicts, and accidents of all types pose a risk to this “stable”, single source of income.

Sure, there are medical insurances, labour laws, and other protections available, but what about protecting yourself upfront by creating multiple streams of both passive and active income? By diversifying your risk on the income side of things, you’re less susceptible to any sort of employer decision and further “insured” that you’ll continue to have income even if one source stops or changes.

Why You Need Multiple Streams of Income

No one gets out of debt by accident and no one creates additional streams of income by accident, however, people get into debt and live mundane, single-income lives all the time, without even trying! Creating a positive financial picture requires intention and time.

The first step in creating multiple streams of income is to discover ways in which you can actively earn income (these require your time and energy daily) and to also research ways to earn passive income (these require an initial investment of time, energy, or money).

Some forms of active income could be from full or part-time employment, selling homemade items as a hobby, refurbishing and reselling furniture, creating an online shop, becoming a freelancer, fixing and flipping rental property, providing photography services, or lecturing at an institution.

Passive income ideas include writing and selling a book, videos, or music, creating an online platform (blog/YouTube channel) and earning income from ads or affiliate links, creating an online course, investing in commercial or residential real estate, and, of course, share market investments with dividends or invest in a short/medium term interest earning investments.

Then, view each stream of income as its own entity and commit to creating one at a time. Map out your desired streams of income in attainable time-frames, keeping in mind that some may take years to create.

For example, you might plan to begin investing a certain amount each month into interest-yielding funds from the income you’re currently earning at your full-time job. Beyond that, you can begin to market some of the items you’ve built or restored as a hobby and earn a little cash on the side. In time (maybe a few years or more), that part-time hobby may be able to fund your first investment in a rental property.

The options, opportunities, and timelines (in addition to the income potential) are limitless!