To learn how to create multiple streams of income requires knowledge of one fundamental factor everyone is after – MONEY. There are three things that must be learned and understood about money, which are:
- making it
- keeping it; and
- getting money to work for you.
These foundational principles are key to becoming successful in creating multiple income streams. Let’s look at these closely.
Build the Foundation First…
I. Making Money
If you have a job, a business or any kind of income coming in, you are making money. If you are in a job, increase your value and ask for a raise. This will increase the money coming in from one income. Likewise, if you have a business, serve your customers diligently and you will be rewarded.
We are in a phase where many people are chasing money and you only have to look around on the internet to see thousands of “get rich quick” schemes competing for your attention. Conversely, how many “get wealthy quick” schemes do you find? That’s because the true path to wealth is slow and patient. It requires hard work and dedication initially.
So whatever your path to making money at the moment, maintain that steady flow of income. You have to prosper where you are planted before you are able to make more or diversity your streams of income. What I mean by that is that if you do not have one reliable source of generating income, how then can you have two, three or more? Make your current income stream work for you and let it continue to work for you.
II. Keeping Money
For many people, money slips through their fingers very easily. They make $2,000 a month, they spend $2,000 or $2,300 a month. I remember here in the UK in the ‘80s before the market crash, it was the era of the so called “yuppies.” There were lots of pretender spenders and even more aspiring to be like them. It was a time of fast cars, trinkets aplenty, fat wallets and fast everything. Some people began to emulate the yuppies by living beyond their means.
What happened to the yuppies? Crashed and burned along with the stock market. People were earning a lot of money during this era. They were also spending it – hard! Even in 2007 during the subprime crisis, new money was plenty and people were spending it.
In this same era of the yuppies came the advent of the “plastic friend.” Many of us became slaves to the plastic friend, which could easily lead to spending more than one earned (I know because I once did it). Credit card debt across the developed countries runs in trillions and continue to rise.
I had a close associate who worked for a certain investment bank in the city of London, earning in excess of $300,000 plus bonuses per annum. She got transferred to New York. Unfortunately, she lost her job and everything with the collapse of major investment banks and financial institutions. Many big earners did not keep, save or invest their money.
So How Do You Keep Your Money?
It doesn’t matter how much or how little you earn. By being financially responsible, anyone can create multiple income streams. Financial freedom comes with money prudence and frugality. If you are in the bracket that owes credit card or loan debts, clearing these first will enable you to start building your financial wealth. Here are some simple ideas to keep the spending in check so that your expenditure becomes far less than your income:
- Know how much money you earn – take a sheet of paper (or a spreadsheet) and list every dime that comes into your hand, e.g. your salary, any shares from your investments, gifts, any cash in hand income. Write all these down so you know exactly how much money is coming in.
- Know where your money is going – take another sheet of paper and list every item you spend your money on. Using your bank statement will also aid in this exercise. This includes the cash you withdraw from the ATM because it is more difficult to account for what this cash was used for.
- Begin to reduce the excess fat – excess fat doesn’t only occur in the waistline, it also takes an imposing place in our spending. Looking at the list of your income and expenditure, what can you trim down that does not add to your survival or help bring money in?
Do you have more food and snacks in your pantry, fridge and freezer than you actually need and are still buying more? Do you need that extra pair of shoes or those items on sale? Uncover and eliminate excess spending. You’d be surprised by how much money you have left after this exercise. Now who is the servant – you or money?
- Begin to clear your debts (if any) – if you have any debts, make a full list of all of them and how much interest you pay. Also identify how this debt originated so you can target trimming future spend also. From the money you saved from your excess spending fat, set up a debt elimination plan. If you have more than one debt, start with the lowest and once that’s cleared, use every amount you were paying into the old debt to the next debt until cleared. Carry on with this compounding process until all your debts are cleared.
III. Get your money to work for you
In this section we are going on focus on how to develop multiple income streams once the foundation has been laid. Exercise #3 above is designed to create a lean spending habit. Once the excess fat is eliminated, you can do much with what’s left over. We are going to look at first things first – the stepping stones to creating multiple income streams. Remember, creating wealth takes time and patience.
Money must circulate and multiply – in his book “You Were Born Rich”, Bob Proctor told a story of an old man called Mr Chapman who lived a life of a pauper but after his death, the Police discovered $100,000 stashed in different boxes throughout the house. This man lived and died like a pauper. He did not invest his money and neither did he put it in the bank to yield interest. The money did not circulate and nor did it increase.
So we have two extreme examples here: earn and spend vs earn and hoard. Without circulation, your money is not working for you; you continue to work for money and effectively become a slave to it.
Money ought to be treated like a seed. Tend the soil, plant it, water the seed and watch it germinate. Once it grows into a plant, all it requires is water and occasional feed.
Make your first investment – in YOURSELF! This is the most important investment. Spend money on your personal development to acquire the right skills. If you don’t have one already, find a mentor to help you initially to get started. Invest in training because the skills you acquire will earn you money tenfold.
The market place pays for value according to the law of compensation. When you increase your skills and contribution, these make up your value. With the right skills you will increase the number of people who seek what you have.
A house that is built on a firm foundation will last. Once a good foundation is laid, you can now start thinking about things you like to do as an introduction to another income stream.
I welcome your thoughts and insights into the types of income streams you are involved in. Next time, I will start looking at specific examples.
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