When you depend on a single source of income, you’re at the mercy of that one job. If you want to have more control over your life and live on your own terms, start to create multiple sources of income.
Also, try to have multiple sources of passive income. Active income is money that you work for by ‘selling’ your time. Passive income is money that comes to you even when you stop working. We earn passive income by building assets that can generate income even after we stop working at it.
When the economy tanked due to the pandemic, my job was put on hold. I was so thankful that I had multiple passive income streams to keep me going. Not everybody is so fortunate. But you can start today, so that you are in a better position in future.
How you can create multiple sources of income
1. Part-time work
Part-time work is attractive in the short run because it pays at once. When you want some fast cash, there are few options that beat part-time work.
Try to choose part-time work that builds skills in areas that are useful for your full-time job. Or that will look good on your resume should you decide to switch jobs or careers in future. You could also work in an area that you’re interested to start a business in, to learn about the industry first-hand before you strike out on your own.
2. Part-time business
This is better than part-time work in the long run because you are building an asset for yourself. While it starts out as an active form of income, it has the potential to become passive over time. Or you may eventually choose to quit your job to run your business full time. There is no guarantee that your business will take off, which is why this option has both the highest risk and the highest potential return.
3. Dividends from stocks
This is the most accessible form of passive income for most people. Choose stocks that pay high dividends. Bear in mind that while you will usually make money over a long enough timeframe, the market can be brutal in the short run. You must be able to stomach paper losses in the meantime.
4. Rental income
This requires a lot more upfront capital. It’s a good idea if you’ve worked for a while and have built up some savings. This form of passive income is relatively stable. Your property value may also appreciate over time, leading to capital gains.
Make sure that after the mortage, taxes, maintenance and other expenses are taken into your account, your net cashflow from the property is positive. If not, walk away from the deal. After all, you’re trying to create a source of income here, not an expense.
5. Private deals
These include partnerships in new business projects, equity stakes in an existing concern, participating in the launch of a venture capital fund and so on. You need to be financially savvy in order to evaluate such deals. While some deals can return thousands of percent on your investment, you could also lose every cent. Trust in your partners is an important factor here. A sensible maxim is: when in doubt, don’t.
6. Intellectual property
Royalties are another source of passive income. If you have a knack for writing or art, this is a good option. You get to exercise your talent and share your gift with the world. At the same time, you get paid everytime someone buys your book or your design.
The best thing about generating income from your ideas is that ideas are free. They only require an investment of effort. The downside is that an idea itself has no value unless people want to buy it. So you have to get good at marketing your ideas, or find a niche where there is a ready demand and fill it.
Create multiple sources of income, one at a time
New streams of income will be small at first, but they grow over time. And the pennies add up. If you make only $100 a month from one income stream, but have 5 income streams, that’s $500 a month. You won’t be a millionaire overnight, but it will pay the bills. Or give you a nice holiday every year.
And if you keep plugging those income streams, they can grow to thousands of dollars a month. Most importantly, you’re not at the mercy of just one source of income, but have several to fall back on. You will have more freedom and control in your life, and greater financial stability.
Learn how to create multiple sources of income
This is a long-term effort on your part, and you need to do more than just read this post. Get one of the following books, and start following the strategies. One day, you’ll be glad you did.