The term multiple streams of income gets tossed around pretty heavily in the world of entrepreneurs. So often I think the meaning gets lost at times. Let’s talk about what creates financial success and the reason behind having more than one source of income.
Having sound financial principals is one aspect of having financial success. This is in both your personal finances as well as in your business. Although there are many principals that can help boost your success in this area, there are some that are most notable and stand out across the board:
- Pay yourself first – This is a savings principal. You are, after all, working for yourself and not for your electric company, so you should get first dibs on your money.
- Stick to your budget – I didn’t say create a budget. Although creating one would be a first step, the hardest part of budgeting is sticking to it.
- Buy what you need – Spend on the extras when you’ve planned out exactly what you can afford to spend and when.
- Review your bills/insurance/savings regularly – What worked for you last year may not work for you this year, a regular review of your expenditures will allow you to keep your bills low and your savings and other coverages maximized.
- Start an emergency fund – And know what counts as an emergency. Nothing can wipe out a good financial plan faster than not having anything set aside for the unexpected.
As I mentioned, these are typical right? But what’s not mentioned here is having a second, third, fourth…maybe even a fifth source of income. We have all been or know someone who only had one source of income coming in and that source was wiped out. Especially if you are in the early stages of the above mentioned steps, you may not be able to survive without your income. So have more than one. This could be in the form of:
- A business (home, online, etc.)
- Network marketing opportunities
- Dividends
- Rents
- Freelancing
- 2nd job
- Hobbies
- Blogging
- Selling a product or service
When you build these streams, you benefit in the peaks by earning more than you spend. This is when you can save and pay off debts. When a dry season hits, or one dries up you have more income streams to rely on.
How do you start? Start by committing to spend less than you make. Take that difference and create a small emergency fund. Then get started creating the next stream by capitalizing on something that you have a passion for or that interest you. When you begin making a profit, don’t go buy a new pair of Jordan’s or a Coach purse…though both can be tempting. Instead, take that positive cash flow and pay down debt, save, reinvest, or start a 3rd stream. A few years of this, and you will love the way your personal financial statement looks…you do have a personal financial statement right??? Another blog for another day 🙂