What’s better than one large source of income?
Multiple sources of income that regularly rake in money, right?
Having money flowing in from different places is extremely powerful.
First, your earning potential increases. Second, you can benefit from both active and passive income sources. Third, multiple flows of income is the Holy Grail of financial freedom.
It’s long been known that the average millionaire has seven or more streams of income. So, you’ll want to learn this skill today.
Multiple Flows of Income
Imagine a river with lots of tributaries flowing into it. Each tributary contributes to the river’s overall magnitude. The more there are, the bigger the river becomes.
It’s the same deal with your bank balance.
Of course, it also mitigates financial risk. The river keeps on running even if it loses a tributary or two.
There are lots of ways to create multiple flows of income, including:
1. Earned Income (Main Job)
Earned income is active income that you make from your job.
Usually, this is income that you are paid as a W-2 employee in the form of a salary.
2. Secondary Earned Income (Side Hustle)
This income you make from a second job or side hustle. For most people, this is an easy flow of income to add into your life.
Given that you can live off the income from your main job, you should be able to push all (or nearly all) of this income into investments, creating a flywheel for your wealth!
3. Rental Income
This is money you make from renting out an asset that you control to other people – such as tenants, renters, or in the case of short-term stays, guests.
If you can’t afford to buy an investment property, then start by renting out something of lesser value, such as a room, a vehicle, a parking space, a car, or an RV.
For example:
- You can rent out a single room using AirBnB.com. (*Note: Only do this if you own the property or get express written consent from your landlord.)
- You can rent our a parking space on SpotHero.com.
- You can rent out your car using Turo.com.
- Or, you could spend as little as $10,000 to $30,000 to acquire an RV and rent it out on RVshare.com.
4. Business Income
This is money made from running a part or full-time business. A business is defined as any process through which you can predictably and repeatedly make money from selling a deliverable.
This could be income that you make from running a brick and mortar business or income generated from an online business.
5. Sales Income
Sales income is any income that you make from selling a product (whether or not it is sold through a formal business entity).
For example, sales income could be generated by creating an e-book or an online course and selling it for a profit.
6. Commissions
Commissions are any income that you get paid based on performance.
Commonly, commissions are paid to sales people or managers for hitting revenue targets.
7. Service Income
Service income is any income that you get paid as a result of providing a service.
For example, this could be money you make from washing a car, money you get paid in exchange for proving graphic design services, or money that you get paid for mowing a lawn.
8. Consulting Income
Consulting income is money that you get paid in exchange for your consulting expertise.
If you don’t know where to start, then sell your expertise on Clarity.fm. This is an awesome site (that I love) where you can be paid by the minute for your expertise.
9. Capital Gains
Capital gains are profit that is made from a selling an asset at a higher price than you bought it.
You can make capital gains from selling things like a house, land, art, vehicles, clothes, etc.
10. Distributions
Distributions are money that you get paid for owning a share of something profitable – most often, a business, land, or rental property.
This could also be money you take out of a retirement account, such as a 401(k) or Roth IRA, after reaching 59.5 years of age.
11. Dividend Income
This is money that you are paid for owning shares of a company.
12. Interest Income
This is income you make from lending your money out.
This could be interest paid in the form of bond, a certificate of deposit (CD), peer-to-peer lending, mortgage lending, hard money lending, or anything else.
13. Royalties / Licensing
This is money you are paid when someone else uses something you created.
This could be fees paid for the use of your music, art, books, videos, training assets, or anything else of value.
Committing to Multiple Flows of Income
And the list goes on.
If our parents and teachers had simply taught us there were other ways to make money than earned income, then I’m confident everyone would be going after it.
The good news is, this is an easy skill to learn and I’m here to help you!
What questions do you have about creating multiple flows of income? Ask them below.
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