Years ago, I read Rich Dad, Poor Dad, Robert Kiyosaki’s ode to financial intelligence and independence. I’ll be honest – overall, I didn’t care for it because it was extremely vague, with no facts available anywhere to back up his claims (in the book or online). Still, I found some of his ideas inspiring as they shifted my perspective just enough to get me thinking. That’s why it’s good to keep an open mind – you never know when you’ll find an absolute gem of an idea.
I have to give Kiyosaki credit for introducing me to a concept that changed the way I think about money: streams of income.
What are streams of income?
A single stream of income is one source for money you earn. The most common example is a job – you work and your paycheck is what you receive in return. That’s an active stream of income – one that requires actual work. It’s also the most common stream of income in the world.
There are also passive streams of income – ones that don’t require active work. An example of a passive income stream is earning interest on an investment. You don’t have to do anything and the money keeps coming in. Passive income streams are ideal, and what I absolutely recommend aspiring towards.
Why would you want multiple streams of income?
For the same reason financial planners always recommend a diverse investment portfolio – if one stream dries up, you’ll have other sources of income to rely on. Most people have only one stream of income – their job. They have all of their eggs in one basket.
What happens if you lose your job? Fear, panic, stress and a lot more. Wouldn’t it be better to be prepared to weather a storm like losing a job? Or even better – wouldn’t it be better to have enough extra money to not need a job? Multiple streams of can help you weather the storm and even rise above them altogether.
What are some ideas for creating streams of income?
Before I go into the ideas, I will make one thing clear: I don’t recommend getting a second job unless you’re in such dire straits that you have no choice. If you’re going to take the time and effort, create streams where working smarter will get you paid more. The best would be to create streams of income where you keep getting paid after the initial work is done (more on that below).
Start a new business (active)
You can use your knowledge and experience to start a business. It could be selling things on Ebay, walking dogs, house sitting – the options are only limited by your imagination. If you need some ideas to get your creative juices flowing, check out this list of 55 businesses you can start for less than $5000 or read the really inspiring book The $100 Startup (affiliate link – learn more about this below).
Start a blog (active)
Blogs can be leveraged to earn ad revenue or sell products but require regular, active blogging. (That’s not a bad thing, since you can blog from anywhere.) Blogs can also take time to build but the effort is worth it in the long run. Rather than picking a blog’s focus based on potential income, be true to yourself and blog about something you are truly passionate about. People are drawn to passion and honesty.
Affiliate marketing (active/passive)
Affiliate marketing means selling someone else’s products and services, earning income as a commission. The first affiliate program on the internet was and still is Amazon Associates, which began in 1996. The income may be active (where you keep selling products to continue earning money) or passive (where you sell a product one and receive recurring income). With some smart and automated efforts, even active affiliate income can become more like passive income (that’s what I do and if you’d like to learn more about it, please sign up for my newsletter).
Residual income (passive)
Residual income – also called recurring income – is gold. It’s also much more common than you think. Think of everything you pay for on a monthly basis: rent/mortgage, cable, mobile phone, Netflix, lawn services, pool cleaning. All of that is recurring, residual income that provides a business owner a tremendous amount of stability. I’m going to devote a future post to businesses you can create for recurring income but here are a few to start you off:
- clubs/membership sites (online or offline)
- affiliate marketing for products with recurring payments
- premium content sites (ie paying monthly to access content)
What ideas do you have?
This post isn’t a comprehensive list but should get you thinking. Look at it this way: if you a traveling a long distance (say 1000 miles), if you adjust your trajectory by 1%, your destination will change significantly. Small shifts in attitude and perspective will have the same effect on your life.