Unfortunately, most people cannot see the importance of adding extra income streams to their primary job salary.
They just rely on it, they tell themselves the story that everything is going to be fine.
As a result, they settle down.
They are not aware of the danger of relying on just one source of income.
Yet, with the outbreak of Covid-19, we have witnessed that thousands of people have been made redundant from a job they considered safe.
All of a sudden they found themselves without a penny.
What a tragedy!
Especially considering that human beings are creatures of habits and tend to walk the known path, and do what they are good at over and over again.
That means that thinking out of the box, rolling up your sleeves, and creating different income streams is a real challenge if you have always relied on your job salary.
But, if the implications are that you are no longer able to provide the primary needs for yourself and your family, I believe that starting to add at least another stream of income to your current salary is a MUST.
What are you waiting for?
Why do you have to hit rock bottom before starting to be responsible for your future and the future of the people you love?
As the old saying goes; “It is better to be safe than sorry”.
More and more people are finding themselves in trouble because they have not invested time, energy, and resources upfront to create different income tributaries.
What do wealthy people do instead?
They always want to diversify into different streams of income.
They know how dangerous it is to count on a single source of income, above all, if it means depending on an employer.
Wealthy people know that by having multiple income streams they can always be in control of their financial standing.
No matter if there is a downturn in the economy, no matter if one, or more income tributaries are dried, they are financially independent.
If you don’t want to run the risk of finding yourself in unpleasant financial situations it’s imperative you take ownership of your financial standing and you start building different income streams.
In the beginning, it may be really tough; after all, you are not used to doing it.
You may find yourself working even more than you are used to.
But in the long term, you will have different passive income streams that allow you to earn money even while you sleep.
What’s more, you may be able to free yourself from your current job and eventually have more time at your disposal.
At the end of the day, time is the most precious asset everyone has.
But, too often we forget this, above all when we run the rat race, working in a 9 to 5 job that sucks most of our time and energy.
Most people work their ass off for someone else, building someone else’s dreams while they are sacrificing their own needs and dreams.
In order to keep their unfulfilling 9 to 5 job, they neglect what’s really important in life e.g. relationships, family, passions, health.
But...Aren’t these the reasons why we earn money in the first place?
That’s why having different income streams is a MUST if you are really serious about creating a life with more TIME, FREEDOM as well as FINANCIAL INDEPENDENCE.
How would you feel if you could have more time to do whatever makes you happy?
It all boils down to how bad you want to make the change from relying on your employer to becoming your own boss and living life on your own terms.
7 STREAMS OF INCOME
1) EARNED INCOME
It is without a doubt the most common one.
This type of compensation is based on the work you do.
It occurs when you exchange your time for money.
Most people are paid on an hourly basis and that means that their compensation is directly related to the number of hours they spend working in their job.
This type of income also applies to self-employees whether they get paid on an hourly, task, or commission basis.
As you can see, in all the above scenarios, if you stop working, the money stops coming in too.
You have to work to get paid.
Wealthy people don’t work for money, they make their money work for them.
Just focusing on this type of income can be really dangerous because it leverages your time, which is limited.
That means that you always have a cap on how much money you can make.
What’s worse, this type of income is subject to the highest tax rate.
Depending on your income the percentage you have to pay on tax will be lower or higher, but the higher paid jobs are close to paying 50% of their retribution.
2) INTEREST INCOME
It occurs when you collect interest on the money you have lent.
For instance when you lend money to the bank in the form of a Certificate of Deposit, or to companies or the Government in the form of Bonds.
They are great ways to start investing money because they are safe investments.
On the other hand, they are not really lucrative.
The return rate ranges between 1%-4% per year.
This is a passive form of income because active involvement is not needed, however, the amount you are able to earn is limited to the money you can lend and what the borrower is ready to pay.
3) DIVIDEND INCOME
It is a payment shareholders receive for owning a dividend-paying stock.
When you buy shares of a company, you become part-owner of that company and eligible for dividends.
If the company you invested in makes a profit it pays you a dividend; it usually happens every quarter.
4) RENTAL INCOME
Compensation generated by lending a property to somebody else in exchange for money.
Most of the time this income comes from renting houses and apartments to tenants in exchange for a monthly amount.
But it can also come from renting land and commercial properties to businesses or industrial real estate to manufacturers.
Besides, this income can also be generated by lending equipment, tools, cars, machines, boats, instruments, and many other properties.
The risk linked to this form of income relates to the tenant’s solvency, but after all, it is a great way to generate passive income.
5) CAPITAL GAIN
It occurs when you sell an asset (e.g. a house, a stock) whose value has increased.
Even if Capital Gain is most commonly generated from real estate or stocks, there are limitless opportunities to earn money in this way.
Unlike other types of income, Capital Gain is made only on one condition, i.e. when the asset is sold at a profit.
What is great about this form of income is that taxation on it is much lower than on other income streams.
Capital Gain taxes can vary from country to country, and they can range between 15%-30% depending on the amount earned.
They can also drop to 0% as it happens for real estate.
6) RESIDUAL AND ROYALTY INCOME
It occurs when you keep getting paid even after your work is done.
Whether you write a book that continues to be read, a song that continues to be listened to or you have your YouTube channel that continues to be viewed, you are generating another powerful source of income.
7) PROFIT INCOME
It occurs when there is a price spread between the selling price of a product or service and its cost.
This is the main feature of an entrepreneur’s income.
Thanks to the power of the net nowadays it is much easier to start this journey.
You can sell either physical or digital products and, by leveraging the net, you can reach a worldwide audience, which means you can make more sales and sell 24/7/365.
To make things easier you may consider starting an Affiliate marketing business module, through which you get paid a commission every time you sell other companies' products or services.
As you can see, the advantage of this system is that you don’t need to have your own product or provide your own service and you can exploit other companies’ know-how.
CONCLUSION
Don’t settle down and stick to just your earned income.
Don’t put all your eggs in one basket.
Diversification is an excellent way to earn more money and reduce the risk.
By achieving financial independence you don’t have to worry about the paycheck anymore.
Remember: at the end of the day the objective should be to have money working for you and not the other way around so that you can make the most out of your most precious asset, i.e. your TIME.
“If you don't find a way to make money while you sleep, you will work until you die”. - Warren Buffet
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