There are many debates concerning when you should consider multiple streams of income. Even though the average millionaire has 7 different streams of income, is it the right way to go? Is it good to focus on only one source of income? According to most experts, using the multiple streams of income to earn money plays a huge role in how financially you become.
However, most people are not independent financially and only have one source of income, thus their job. This is the reason why creating multiple streams of income is important to your financial freedom and protecting your finances.
Think about it. You don’t have to worry about losing a job because you have multiple streams of income. When there are multiple streams to your income, losing one job is not a big of an issue.
Multiple Streams of Income, What Is It?
The term Multiple Streams of Income speaks for itself really. It’s the idea of earning from more than one different source. Instead of focusing on one income for your financial survival, you concentrate on many other areas as much as possible to earn your income. This is how to create wealth regardless of what other people say.
Why Is It Necessary To Diversify My Income?
You don’t want to run dry on your income. If you’re focusing on one source of income, the probability of running dry is high. Because many things can go wrong, your rent, bills, loan, debt, etc. The only way to stay ahead of these challenges is diversifying your income through multiple streams of income.
When you think about it, there’s less risk and more control over your income when you diversify your income through multiple streams of income. You’re less at risk this way. Having control over your financial life allows you to take a vacation when you want to, take control of your children’s school fees and many other things you cannot do with one source of income.
Things Are Changing
One reason why multiple streams of income are very important than ever is how the work environment is changing. Due to technological advancements, globalization, and other factors, using only one source of income is not ideal.
Millions or workers are going to be displaced by AI technologies. If you want to be one of the few who stands out and prosper in that time, you need to be prepared. The only way to do that is to diversify your income through multiple streams of income.
Millionaires understand this concept that when you have money coming from different sources, the more protected you are from your downturn, personal health crises, job loss or anything that can cause your financial harm.
Why Should You Consider Multiple Streams Of Income?
As noted earlier, a millionaire averagely has 7 streams of income because they know it’s not wise to focus you income in one area. Putting your eggs in one basket is not wise. It only puts you at risk. One source of income is rarely profitable. Simply, it cannot be compared with multiple streams of income.
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There Are 4 Types Of Income
According to Robert Kiyosaki’s book, The Cashflow Quadrant, he teaches four types of income:
This type of income is what almost everybody earns. If you’re working for someone, then you’re earning an employee income. The problem with this type of income is the fact that all the power rests on the employer. If the manager decides he doesn’t need your services anymore, you’ll be at a disadvantage.
Business Owner Income
People in this type of business has the capacity to earn huge income. They don’t do all the work themselves. They hire other people to do a majority of the work while they run the entire business. When you decide to take a vacation, the business will still run because you have other employees working for you.
With this type of income, normally the money received from your paycheck is used to start this business. Of course, you’re your own boss and decides what happens. It has its advantages but it also has it downsides. With the downside, everything depends on you completely. You tend to be more overworked and over stressed.
There’s little time to relax and lots of responsibility is placed on you. it can be rewarding but still risky unless you have other streams of income as well.
This is the pinnacle of income. This is what is termed as passive income that you don’t have to actively do a lot of work to generate the income. People in this category have a lot of earning potential. They tend to build wealth much faster.