You Need Multiple Streams of Income
building wealth is much easier than carrying debt
In the first four months of 2019, the debt to disposable income level for Canadians came in at 177.6%. That means for every dollar of disposable income that households have to spend, they owe almost $1.78.
These numbers are the only indicator we need to know that people need to have more of a security blanket to protect their livelihoods.
As a parent, having options is a big deal, especially when it comes to money. Having multiple streams of income means you can do more with your money and spend less time worrying about it, and that is the ultimate reason why it's crucial to have them.
You work hard for your money, honey
For me, working has always been a massive part of my life. From the moment I got a job at 16 years old, I fell in love with the feeling that was receiving a paycheck and having the freedom to choose what I wanted to do with my earned income.
I love to work, but not for the typical reasons that most people love work. I work from home, so I don't see any coworkers for the morning and afternoon small talk, and I don't get free cake when it's someone's birthday.
I love work because it gives me options in life. I love work because the more you embrace your different strengths, the more opportunity for growth and the more opportunity to increase your earning potential. One of the reasons this is so important to me is because I'm a mom.
To ensure a safe, and happy, and healthy future, you need multiple streams of income. And this goes for everyone – not just parents.
This year will be my highest earning income year, mainly in part, because I have multiple streams of income.
There's a quote that everyone loves to share, stating that "the average millionaire has seven streams of income," and I know what you're thinking: "I'm not a flippin' millionaire."
Well, same. But, that doesn't mean we can't take this idea and make it work for us.
There are seven potential streams of income:
Earned income - money from a full-time job
Profit income - money from side hustle or product
Dividend income - money earned from investing
Interest income - money earned from saving
Rental income - money earned from real estate investments
Capital gains - money earned from the stock market
Royalty income - money made off a piece of work sold to another company
To be honest, you probably already have more sources of income than you even realize. Job? Check. Retirement fund? Check, please! High-interest savings account? Bingo! That's three right there. So, don't be discouraged because some millionaire out there is doing it all.
Multiple sources of income let me focus on the essential things in my life, such as family and hobbies. They can benefit you in the same way. But how?
What are the benefits of multiple sources of income?
Financial security - If one source of income drops, you have other options to recover that lost income.
Diversification - A variety of sources allows you to protect yourself and boost your risk tolerance, opting for newer ways to invest and save.
Increase your income - You will learn how to earn more money, garner new skills and build wealth.
Passive earnings - There are ways to earn extra money without adding additional work. You know what they say: you work hard for your money, so it's time your money works for you.
To be honest, the moment I paid off my debt, I have been striving to do more with my money and be more focused on my financial future. I quickly realized that building wealth is much easier than carrying debt, and that's because, for the first time, your interest will work for you rather than against you.
At this moment in time, I have six of the seven sources of income available. The only one I don't have is real estate income, and that's because it's not an interest of mine – for now.
Multiple streams of income require discipline and time, but if you start with one, you can move to another, and continue to grow your earning potential. Don't beat yourself up if you're not there.
Tip #1: Start with a natural source.
If you already have a job, consider what your investment portfolio looks like.
Tip #2: Find your why.
The moment you can correlate your financial life to something more meaningful, the moment it will become easier to take control of your planning.
Tip #3: Be patient.
"The strength of your personal financial resources is equivalent to the quality of your financial decision making." - Wayne Chirisa
For me, the feeling I get every single time I hit a financial goal is a reason enough to continue down the path of financial success. There will be bumps, there will be difficult times — but the more you protect yourself with diversity — the better off you'll be.