Having multiple sources of incomes, ensures that you can live a rich, comfortable and risk-resistant life. In the long term you enjoy peace of mind and pass on rich legacy to your next generation
One cash flow - say a salary or profit from a business - will not provide security in all times. On the other hand, multiple cash-flows provide stability and security. In case one cash-flow vanishes or reduces, the other one gives you comfort and sustenence.
Let’s see the types of second and third income that you can create:
Spouse income: If the husband or wife is also earning, it acts as a buffer for both of them. In today’s economic environment, job security is a thing of the past. Having the spouse earn is a big positive. This second income can be used towards the burden of household expenses, towards investing for the future, and as a back-up to the first income etc. Even if the spouse wants to work from home, today there are options - freelance work, part-time work, flexi-hour work, tuitions, cooking/catering, designing, etc can all be done from home. And important thing to remember is even if spouse’s income is 23-30 persent of the main earner in the family it is great because if even you lived-off one income, financially you can be vary well off in the long-term
Hobby income : Almost everyone has a hobby or an interest - art, cooking, fabrics, designing, books, photography, interest in History or coaching and training. The list is endless. You can use your hobby to generate income and cash-flow. For instance, highly educated person can teach on week-ends for joy and money or you can paint and sell painting to sustain your art hobby. Indulge in your hobby and make it pay. Who knows, it may become your secong career!
Rent: Being a landlord is fabulous. You get rent for the rest of your life on the asset that you have created. This type of income also can grow if your property is good, well maintained. The growing income is a hedge against inflation. If you can earn rent to pay for your living expenses every month, you can be very close to achieving financial freedom!
Passive income from your portfolio : Passive income is income you earn without working. This is the best form of income or cash-flows because you earn it even when you are sleeping. For instance - interest earned from fixed deposits, dividend from stocks, gains from shares. The more assets you buy, the more your passive income can grow.
Intellectual Property (IP) : Writing books, inventing a new machine or process, writing or composing a song are examples of this type of income. This is also a superlative from of income because you create IP only once (with your mind) and reap cash-flow for the rest of your life.
The endeavour of every person should be that at least 23-30 percent of your total income should be from this type of income.
- First secure one cash-flow before starting on another.
- Go for small but sustainable cash-flows rather than big gains.
- Regular cash-flows over long-term are preferable over big gains one time. People tend to spend big gains.