Welcome to Let’s Talk Money Monday! “The New 7 Income Streams of Millionaires,” written in collaboration with Justin Castelli of RL Wealth Management, is a three-week series to give you ideas, tips, and strategies for creating the financially-free life you dream of. Each week, we’ll take you through a specific type of income stream and give you some examples of how you might integrate it into your life. In the end, this is about you. Pick and choose the income-generating activities that fit your life and your goals, and run from there! And remember: start where you can (even if that’s 3 income streams) – Rome wasn’t built in a day, and your financial freedom won’t be either. But, stick with these strategies and, over time, you’ll end up with a life you intentionally designed. So let’s get started! This week, we’re talking how to effectively stack active income streams.
When you first hear that the average millionaire has seven streams of income, it might be a bit intimidating. But, what you have to realize is that most definitely does not mean that the average millionaire has seven jobs. No, no, no…quite the contrary! Many of those in the top 1% understand how to work smarter, not harder. And, once they have a good financial base in place, they understand how (and work with financial professionals) to start making their money work for them.
Traditionally, what this means is that they combine a strategic mix of active, passive, and portfolio income streams that fit their savings, lifestyle, and goals. First, a few definitions:
- Active income streams are what you bring in when, you guessed it, you are actively involved in business activities on a continuous and substantial basis. Things like a salary, commissions, wages, and tips…trading time, skills, or services for money.
- Passive income streams result from any business in which you as the taxpayer do not materially participate. This includes rental property income, payoff from investing in a business that you do not work in, and various forms of online affiliate or advertising revenues. I would also include residual income in this bracket.
- Portfolio income streams are neither passive nor earned through normal business activity. Rather, portfolio income results from things like investment capital gains, dividends, royalties, and interest from loans.
So, what does this mean for you, a 20-30-something, as you’re just getting your feet under you (or even starting a family)? How do you leverage these strategies to best position yourself for the future financial freedom you crave?
Here’s how we see it…
Active Income Today
Today, you have more opportunity than any generation ever before to create multiple streams of active income. People have worked multiple jobs for decades…but we’re looking at it a bit differently. You are lucky enough to live in a time when the YouEconomy is on the rise and you have all the tools and knowledge that you could ever need right at your fingertips.
In addition to your 9-5, the YouEconomy allows you to plug in and offer your services on what is essentially a freelance basis. Don’t get me wrong: freelancing or any of the things we discuss below can be 100% legitimate full-time occupations. However, in this scenario, we’re going to assume you have a “traditional” full-time job and are looking to supplement it without having to take on an additional job in the traditional job market.
Here are a few ideas you can explore for bringing in income in your off hours:
Services that connect you to users / customers.
There are dozens of sites out there to help you market, sell, and connect, depending on what specific skill or service you have. Becoming a driver for Uber, selling your goods on Etsy, reselling products on eBay, working odd jobs for hire on Task Rabbit, becoming a shopper for Instacart or other delivery services, and taking on larger-scale freelance work through Upwork or Sparehire are all ways to earn a spare-time or part-time income during what Gary Vee calls the 7pm-2am #hustle. Take on a little as you want or as much as you can handle – it’s up to you! The point here is that it can be a great first step in bringing in additional income, building your portfolio, and padding your savings.
We’ve talked about this one before in “5 Reasons that Network Marketing Has It Right.” It’s an industry that’s been around for decades, but is also currently on the rise due to the increased ability to connect with people all over the world on the Internet.
Plus, in network marketing, the corporate structure of the company does most of the dirty work for you…meaning that you can focus wholly on income-generating activities. The industry catches flak at times, but it’s a vehicle that brings financial and time margin to millions and millions of families everywhere. If you do it right and treat it as a profession (even when you are doing it on the side), it might be the best shot you get for breakout success.
Marketing your services and skills locally.
While online platforms like eBay or Upwork are super helpful in connecting you to people you wouldn’t otherwise ever come into contact with, my guess is that you already have a pretty strong personal, local network. Think about your hobbies or things you love to do and how you might be able to offer your services locally. Are you great at taking pictures? You could start up a photography biz on the side. Are you super creative and good with design? You could refinish furniture, do some interior design for friends looking to make a change, or stage houses for a local real estate agent or friends who are trying to sell. Do you love to work out? You could become an instructor for a variety of group fitness classes. Take inventory of your skillset and interests, then figure out ways you can monetize it.
Trading Time for Money
Of course, there are many other options out there…in fact, the list is almost endless. But, when thinking about what active income streams you can stack, be careful to consider what your actual time investment will be (i.e. how many things you can sustain WELL at once – no sense in doing a bunch of things poorly when you can do two really well). It’s also important to consider whether or not there are any financial requirements to getting started. Remember, active income streams trade time for money…budget your time and stack your activities strategically!
What active income streams are you considering? Which have you already tried?
Stay tuned next week as we dig into passive income streams that can help you build your nest egg…this is where things start to get really fun!
If you’re curious about what joining the YouEconomy looks like, think residual incomes sound like the bomb.com, or would like to create a plan for building up your active income streams, reach out to Ashton at firstname.lastname@example.org or via the Contact page!