How much anxiety and worry does your current financial situation give you?
If I told you that they way to end the cycle is with multiple income streams, what would you say?
In this post, I cover how multiple income streams is they way for you to achieve financial freedom. Not a single person on this planet has become financially free by having one source of income. Those that make a lot of money from their job, have to invest in other flows. Otherwise, they are at peril once they lose it.
Why should you care about multiple income streams?
Well, it reduces your risk, increases your buying power, improves your financial flexibility... And this is the only way to achieve financial freedom. How does that sound to you? If you like it, keep reading. If you hate it, skip the rest of this post.
This is the Way - Mandalorians
Multiple Income Streams
Multiple income streams refer to different ways that you earn money. These could be active or passive. Your goal is to have as many income streams as possible. This ensures a constant supply of money coming in case you can always guarantee that money is coming out. I mean you have necessities, such as food, water, shelter, and transportation, right? Society revolves around those essential services to keep the economy going. But, they only care about your income to qualify you for those services. In short, they ask themselves, do you earn "just enough" to pay the bill.
The other major difference between the two forms of income is taxes. The U.S. Internal Revenue Services (IRS) views active and passive income differently. Thus, they tax you different as well. The best way to reduce your tax liability is to earn passive income.
Taxes are your biggest expense. - Robert Kiyosaki, Rich Dad Poor Dad
This is the main reason why wealthy people "avoid" taxes. Of course, that's not the case. Wealthy people still taxes throughout the year. They can't get away from paying federal, [in some] state, sales, property, excise, estate and gift, social security and medicare... And the list goes on. It's rather exhausting.
The difference between wealthy individuals and me, a commoner, is that they qualify for a lot of tax benefits. Wealthy people participate in the many incentives the tax code provides. Thus, they receive a HUGE refund at the end of the year. Often times, their refund is greater than what they paid in taxes for the year. The reason, they spent a lot more money on the incentives instead of consumer goods.
So lesson number #1 is pay attention to your taxes and learn ways to reduce your tax liability. Always consult a tax professional, though. I am not one, by the way.
Still... why should I care? Here are the benefits I mentioned above:
Reduce your financial risk. When you lose one source of income, you still have other sources to rely on. This is extremely important when there's economic uncertainty. What are we experiencing right now?
Increase your buying power. The more income streams you have, the more money you can spend or invest. Remember you want to spend your money on things that give you a tax benefit. Otherwise, consider saying "NOPE." You want to invest in assets that pay you. You may want to reduce debt.
Increase your financial flexibility. This refers to your work and life balance. At one point, you may want to work either part-time or remote. You may want to work from anywhere in the world. You may want to set your own hours. Whatever your goals, multiple income streams helps you get there.
Increase your financial security. This reduces your anxiety and worry. You get to retire early, travel the world, or pursue other passions.
BONUS: Increase your ability to help your loved ones. Multiple income streams allows you to help your loved ones in times of need. Take the loss of a family member's house due to a natural disaster. We know insurance companies nickel and dime our claims. What will your family member do while they wait for the insurance company? How are they going to manage or survive? They will likely going to ask for help and you will be able to.
Active Income
When you work for money, that's active income. This include things like a salary, wages, commissions, and tips. You have to actively trade your time for money to earn active income. Here are some examples:
Freelancing
Consulting
Driving for a ride-sharing company
Delivering food or groceries
Working for an employer (i.e., McDonald's, Walmart, etc.)
The IRS taxes this form of income the most. Thus, your goals is to turn active income into passive income as fast as possible. And I don't want to give you the impression that it happens fast. It certainly takes time.
Passive Income
Passive income is income you earn without having to work for it. This includes rental income, investment income, and royalties. You get this form of income from assets your own. These assets reduce your risk and increase your income with little to no time or effort on your part.
Another thing to note is that you earn passive income from doing the work once. For example, you earn passive income from:
Investing in real estate
Investing in stocks and bonds
Creating and selling digital products
Monetizing a blog or YouTube channel
Earning affiliate commissions
Once you purchase a real estate property, you start collecting rent. That's passive income. Once you invest in stock or bond, it starts paying dividend. That's passive income. So on and so forth.
If you don't find a way to make money while you sleep, you will work until you die. - Warren Buffet
Conclusion
Looking for different ways to make money in a great thing. Everyone has the opportunity to do as well. We all have 24 hours in the day. So use your time.
If you want multiple income streams, start with something that complements your current job. For example, if you are a secretary then begin freelancing on managing someone's calendar, financial statements, payroll, emails, etc. This is active income, of course, Thus, you have to face the tax man at the end of the year. You want to use that money to create other sources of income, though. You can use your freelancing income to invest in real estate, stock market, or tax liens. If you need to build capital to invest, then store the money in a savings account. I say store and not save. You intent to use the money once you reach the amount that you need for the investment.
If you have no idea where to start, I recommend doing a little search on Google for ways to make money. You will find a plethora of options. If you find it too overwhelming, then check out these programs:
These programs are some of the ones that I know of. They have different price points and are great for beginners. They majority are super affordable. Each of these programs teach you how to create multiple income streams.
Action Plan
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Disclaimer
I used the help of artificial intelligence in writing this post. I edited the content to match my personality and writing style. I also edited the content for accuracy.
I am not a financial and or tax specialist. The information on this post is for your educational purposes only. Consult a financial or tax professional for every financial decision I inspired you to take.
I included affiliate links t this post. I earn a commission when you buy a product or service using one of my links at no extra cost to you. Thank you for you support. Congratulations on your investment!
