Create Multiple Streams of Income
In today’s world, you can’t rely on just one form of income as things can change in the blink of an eye! You do not want to be stuck should that single stream of income go away. Which is why it is recommended to have multiple streams of income. I have three out of the seven below streams of income, and I am trying to get all seven! I am going to go over what each one is and how you can go about getting more than one. The majority of millionaires have multiple streams of income as they don’t rely on just one. It is reported that 65% of millionaires have 3 streams, 45% have 4 streams, and 29% have 5 or more streams.
Here Are The 7 Common Streams Of Income:
- Earned Income
- Business Income
- Interest Income
- Dividend Income
- Rental Income
- Capital Gains
- Royalties/Licensing Income
1. Earned Income
Earned income is the most popular form of income. This is the income that you make while working at your regular job. Most people rely solely on the single income from their job and think that is going to be sufficient. But as we all know, things can change in the blink of an eye. Especially in the past couple years with Covid. Too many people lost their jobs due to the pandemic and were left with nothing. Having back up streams of income is super important especially for times like we are currently in.
2. Business Income
Business income is the second most popular form of income. In addition to your regular job, business income is money you make from businesses you start up or side hustles. For instance, I make money selling gently used clothing on Poshmark and Mercari. I also make money through blogging and brand deals on my Instagram and Tiktok accounts. All of these are additional streams of income to my full-time woodworking business where I make and sell custom furniture. Should I have a slow month, (or this year when I found out I was pregnant and had to take off the last half of the year), I have these backup methods of making money still. That way I am not stuck in a rut trying to pay. my bills because something happened to my regular job where it’s not bringing in money.
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3. Interest Income
You can earn interest income mainly through your bank, or if you loan money out to others. Most banks offer interest on money when you bank with them, although this interest rate has dropped significantly in the past couple of years. If you ever find yourself able to loan money out to someone else, you can charge them interest just as banks and dealerships etc. charge interest for taking loans out from them. This is a harder stream to acquire, but it is still an option. I do not have the stream, I do have a bank account, but the interest is so low I wouldn’t consider it income.
4. Dividend Income
There are multiple ways to earn dividends, the most common way is probably through stocks and bonds that yield dividends. Or, depending on the structure of the company where you make your earned income, you could earn dividends through your company depending on its structure. Investments also can pay out dividends usually quarterly or annually.
5. Rental Income
This Stream of income is becoming increasingly more popular over the past decade. With the housing market skyrocketing, people can’t find houses to buy so they resort to renting. Also, Airbnb and VRBO are huge moneymakers with people purchasing houses, fixing them up, and then renting them out on the website. For some people, this is their main form of income. And you don’t have to limit renting to just houses, you can rent out pretty much anything you can think of. Turo is a website where you can rent your car out to people, you can rent tools out to people, you can rent clothing out to people… There are many ways to get rental income if you are creative with it. This is the next form of income I am working towards, I would love to get a fixer-upper, completely redo it, and then list it on Airbnb to rent and make money on the side.
6. Capital Gaines
You can earn capital gaines income by selling assets such as your house (most common form), a business you’ve grown, priceless art pieces, and investments. There are lots of rules in regards to selling these assets and how they will or will not get taxed (for example where I live you must live in your house for more than 2 years in order to avoid capital gaines taxes). Check the IRS website if you have any questions about how your asset will be taxed should you choose to sell. House flippers are subject to this tax because they are not in the house more than 2 years thus why they try to flip as quickly as possible.
7. Royalties / Licensing Income
Royalties and licensing income is an excellent passive income source. You have probably heard of the brand “Rae Dunn”. It is a pottery brand with words on each piece that was super popular, and is still pretty popular to this day. It is sold primarily through the TJ Maxx corporation at all of their stores (TJ Maxx, HomeGoods, Marshall’s). Rae Dunn is an actual person, she is a pottery maker, and she sold her designs to the TJ Maxx corporation to sell in their stores. With every piece that is sold in these stores, she makes money off of them. If a mug sells for five dollars, of course she does not get the full five dollars, but she will get a percentage of that sale because it is her design, and it is considered a royalty. I am working on my own invention to help with woodworkers in their workshops, and if I can get it patented and produced, I plan to reach out to WoodCraft and Rockler to see about selling in their stores and on their websites. I would hold the license/patent but by working with these large companies, I would sell that to them but would earn royalties with each sale through their companies.
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