★ Rich Habit #20: Creating Multiple Streams of Income
This is the last instalment of our Rich Habits series, by best-selling author Tom Corley.
We thank Tom immensely for sharing his research with us!
Successful people do not rely on one stream of income. They create multiple income streams during their lives. They have “several poles in many ponds” and are able to draw income from other sources when one source is temporarily impaired.
Some of the additional streams may include: a side business, real estate rentals, REITs, tenants-in-common real estate investments, triple net leases, stock market investments, annuities, private equity investments, part ownership in businesses, financing investments, ancillary product or services and royalties (patents, books, oil, timber).
Each additional stream gives them extra money that they can then use to invest in order to create other streams of income.
Unsuccessful people rely on one stream of income – their job.
They put “one pole in one pond” and when that single income stream is impacted by an economic downturn, they suffer financially. Even worse, the vast majority of those just getting by do not like what they do for a living. As a result, they feel imprisoned by their jobs. They are what I call wage slaves.
If you’re raising a family, it’s not easy. It’s already hard.
But, understand this: as your kids get older, it gets easier. As they near college age, your time-related commitments begin to decline. You will eventually have more time to commit to growing those income streams.
Now, while your kids are young is actually the best time to take baby steps and begin slowly building something on the side. I’m talking about no more than five to 10 hours a week here, devoting yourself to something you are passionate about and that can eventually be monetized.
I’m talking about investing in yourself and your future now so that you can reap the dividends down the road. And trust me, you’ll be glad you did because as your kids get older, their financial needs become larger.
Those income streams will eventually kick in enough to allow you to quit your full-time job and hire individuals to help you manage your investments. This will free you up to enjoy the dividends: a vacation home that becomes a hub for your adult children, financial independence so that you don’t become a financial burden on your children, a retirement free from financial worries, and money to help your adult children buy their own homes.
Putting all of your eggs in one basket is simply a recipe for financial disaster.
If that basket breaks, what do you do? If you want to make your life easier down the road, you need to invest in yourself now. Find something you are truly passionate about and that has potential to generate an additional stream of income.
Passion is the key. It’s the most important attribute of self-made millionaires by far, from my studies, and is the catalyst to wealth building. When you pursue something you are truly passionate about, you are somehow able to find the time to devote to it.
But you’ll never find your passion unless you try. You must take action and invest in yourself today in order to create the future life you desire.
How do you create multiple streams of income?
- Save, save, save – Save 10 to 20 percent of your net income every year and then invest it.
- Expand your means – Start a side business or side career that generates additional income.
- Create multiple investment baskets – Invest your savings and additional income into investments that generate passive income such as: residential and commercial rental properties, TICs, triple net leases, equity investments (stocks, bonds, mutual funds), annuities, permanent life insurance, royalty-generating property (timber, oil and gas), boat rentals, etc. If you can’t do it on your own, partner with others and keep building your portfolio of assets that generate passive income.
If you want to become wealthy, you need to create multiple streams of income. Successful people do not rely on only one stream.
EDITOR’S NOTE: We thank Tom immensely for sharing his research with us over the months! We hope you’ve enjoyed this series as much as we have, and you can catch all habits #1-#20 here anytime (they make for great reminders :)). Make sure to check out his book on the very same topic too! “Rich Habits: The Daily Success Habits of Wealthy Individuals.”
Stay tuned for a new series coming to the site, starting next week in this very same time slot :)