Building multiple streams of income is no longer a luxury, it has become a necessity. If the high rate of unemployment and mounting job losses have taught us anything, it is that nobody's job is safe. Unfortunately for most people, their only source of income is from their job, which can be a risky way to live. Some couples may be more fortunate and have a spouse bringing in money each month, but they are still relying on a job for their livelihood.
What would you do if your boss fired you overnight? With no more paychecks coming in, how would you pay the bills, put a roof over your head, and feed your family? I know what I would do: nothing. Because I have several bosses, including myself. When you have multiple income streams, losing one is not that big a deal. I know you probably think you can't work anymore than you already do, with your full time job and other personal commitments.
Because of the financial risks involved with relying on a job for all of your incoming cash, it is critical to consider having at least one additional source of income. This doesn't prevent youfrom trying to add one or more streams to your monthly income.
That can include:
- Dividends from stocks
- Register your car with UBER for a rental income.
- Interest from the bank (if you're not getting at least 1% interest from your savings account, consider switching to a fixed deposit account with higher interest rate
- Rental income on investment property.
- Invest in government bonds or treasury bills.
- Income from a room you rent on Airbnb.
- Freelance income
- Extra shifts at a local store around the holidays
- A business you start on the side
- You can buy some food crops such as zobo, yam, egusi, pepper during their season, preserve them and sell at a later date.
- Marketing your skills, from being an awesome tutor to fixing computers
- Something relating to your passion such as basketball referee or teaching a painting class on weekends
- Finally you can start online business ranging from writing e-book, sales of data, web site designing, e-commerce, on line coaching e.t.c.
If you are ready with any of the aforementioned we at getting rich staying rich group have professional consultants who can help you with a business plan.
And much more. As you often hear say when it comes to investing, don't put all your eggs in the same basket. Solely relying on employment income is doing just that, putting yourself at risk through lack of diversification. Having several income streams makes you much stronger in case of a layoff.
As a real life example, here is where my money comes from every month:
- Rent from four tenants
- Fees from a crèche in one of my apartments
- Trading forex
- Owning two personal finance sites
- Filling of bill of quantities for bidders of government contracts.
- Renting out my car and tricycle
- Bank interest
Buying cash and food crops, preserve and sell at a later date. That's 14 income streams right there (counting four rents and two websites as six streams), plus one stream per filling of bill of quantities for bidders of government contracts . Some streams are recurring, some I only get a few times a year. Sometimes I'll have a dozen contractors make between N1,6000,000-N2,000,000 in a year , sometimes I'll have none. What is unlikely is losing all my clients the same month my four tenants vacate my rental, the stock market crashes and all my peer to peer loans default. So while my monthly income will fluctuate, it will never be N0. And I will never have to rely on any specific one of them, like you are doing with your 8 am to 5 p.m day job.
How can I get started?
In an ideal world, you will build a stream of passive income, through dividends or real estate for example, one stream at a time, until the combined income surpasses what you make at your day job, and you become financially independent.
In reality, that does take a lot of time and hard work to achieve. But in the meanwhile, every income source is a little help when it comes to building your retirement nest egg. Because there is an added bonus to having multiple income streams. Financial independence is a simple concept, albeit not an easy one to implement. You need to spend way less than you earn, so you can achieve a high savings rate, which, once invested wisely for a decade or two, will bring you the freedom to not have to work for money any longer.
Spending much less than you earn can be done two ways:
- By decreasing your expenses or
- By increasing you income
If you take a good look at your expenses, you will probably find some areas where you can easily reduce waste and spending without drastically impacting your quality of life.
However, once you are down to a reasonable level of spending, the only way to cut off some more is by implementing radical changes, such as moving to a tinier place, like moving from a three bedroom flat to a two bedroom flat this will really help you I know of some people who choose to rent a three bedroom flat in the town of Abuja for N4,500,000.00 per year with service charge inclusive and some made a better choice to live in a three bedroom flat in one of the satellite towns for N600,000.00 and in no time build their own and have more savings. I used to jokingly laugh with my friends “dashing out N4,500,000.00 to Landlord without receiving a thank you in return”
While most people can stand to significantly reduce their expenses, you can only reduce your expenses so much before you start sacrificing quality of life. On the other hand, there is no limit to increasing your income. If you make N120,000.00 a month and spend N108,000.00, your savings rate is 10%. Bring your expenses down to
N96,000.00, and you are saving 20% every month. It is doable Good job! However, going under N96,000.00 might feel like a bit of a stretch.
There's no limit to the journey of financial freedom But if you can find one client, willing to pay you N7,500.00 per month for a two hour lesson (what worked for me was tutoring, mathematics and Economics lessons as we know a lot of students have challenges when it comes to mathematics as a subject. You can teach anything you are good at) or a freelance project, and get 4 clients you have made another N30,000.00 this month. You can now save N54,000.00 monthly You have learned to live on N96,000.00 , so your savings rate is now a whopping 36%. Assuming a fixed deposit rate of 8%, you need a nest egg of N20,000,000.00 to retire in the next sixteen years with a savings of N54,000 a month but if you are just 30 years old and want to retire in thirty years time, you can save N13,500.00 monthly.
Keep earning N120,000.00 and living on N96,000.00 with an additional income of N30,000.00 , and invest your savings at 8% annually, after 16 years, you will have N20,000,000 in the bank. Financial independence is just 32 years away. If you keep living on N108,000.00 and making N120,000.00 however, it will take just 32 years to reach financial independence. Still good news if you are a young professional in your mid 20s, you could retire in your early 50s. But if you are in your mid 30s already, and don't want to work past 60, you need to boost your savings rate. And nothing will help you do that better than having several income
Take a step towards financial freedom today.