People who own a business often understand the powerful concept of multiple streams of income. Given that any business can have economic, regulatory, or industry changes that can hurt the income stream of a business, most business owners develop multiple income sources within their business to protect the cash flows of the company. Sometimes these changes are in different lines of business, types of products, or services that complement each other. I think over the next decade, each household in America will need to consider having multiple streams of income with job and market uncertainty we will face in the years ahead of us. So, how can you create multiple streams of income?
1. Both partners in a household have a stream of income – In my opinion, letting your household rely on just one breadwinner that has a job as an employee with a company is an incredibly dangerous strategy. As large companies feel pressure to meet Wall Street analyst’s expectations, the pace of growth in income and number of higher paying jobs will continue to shrink at the corporate level. Both partners should have some consistent income in different industries so all of the waged income isn’t in one basket.
2. Open a business — Over the next ten years, I believe you will see more people between the ages of 30 to 50 open some type business in large numbers that we have never seen before. When you decide to begin a part time business if both partners have a waged job is an important decision. You may open one up part time, or consider having one spouse begin to make the transition into beginning a full time business. Preferably, transition into something where you can use your base of existing skills to make it easier to ramp up your cash flow.
3. Invest in a business – If you don’t want to own one, do your due diligence and see if you can find a business that could create you some additional cash flow. While the banks are being incredibly stingy with money, there may be existing businesses that are already profitable, but looking for expansion capital. I would avoid investing in a start up business, but rather look for one that has profitability occurring already where you can share in the profits of the company.
4. Get a piece of rental real estate – If you have the time and ability to manage some real estate property, you may be able to create some additional cash flow by owning a piece of rental real estate property. This can be done passively or actively, but real estate prices are extremely low right now. If you can qualify for additional mortgages, this may give you another outlet for a stream of income. Know in advance that managing a rental property will involve both additional time and money on your part.
5. Start a blog – If you design a blog and you content is really good, advertisers will pay you money for giving your opinion or expertise to the public. Blogging used to just be a place to state your own commentary, but now it has turned into a full fledged business for bloggers all around the World. They can be very cheap to set up, and will cost you more time investment than it will money.
It will become more important over the next decade to build some defensive strategies by creating different streams of income. As there is no sign in sight for the unemployment rate to go down, one of the smartest financial moves is to begin to get investments that will create you other lines of cash flow. As we have all faced the time in lives at least once where we had no hot water, everyone knows that a cold shower is not fun at all. Losing your job and having no other stream of income will feel just like plunging into a lake of cold water, so start thinking about getting another avenue of income today!
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
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