Most of us have heard the saying: "Don't put all your eggs in one basket." which may be taken to mean don't risk everything on the success of one venture. This advise may be applied to our finances because it's not good to expect everything that we need to come from one source.
Why it's important to have multiple streams of income
It's not possible to control everything when it comes to our finances. We can't control our bosses, the government or the economy. Therefore, we must set ourselves up in such a way that regardless of what's happening in the economy, we'll still have some income coming in because all of it isn't coming from one source.
Steps for having multiple income streams
1. Start with one source that will at least cover your living expenses.
This source should bring in some money as soon as possible. And yes, it can be from a linear source such as a salary from a job.
Linear income is where we trade hours for dollars. This kind of income stops when we stop working. For example, a monthly salary, hourly wages or a one off commission paid for a job completed.
2. Add a residual source of income.
Residual income is money we earn over and over and over again from work that we did one time. This kind of income doesn't stop when we stop working. For example, income from revenue sharing sites such as Infobarrel, a business that you started, network marketing such as LiveSmart360 or affiliate marketing.
The reason why it's important that any additional stream is residual (and not linear) is because adding only linear streams of income eventually leads to the burn out thread mill lifestyle sometimes referred to as the rat race.
3. Focus on getting each stream going strong before you add another.
This is not a get rich quick plan. Therefore, it may take a few years to get some residual streams of income going. For example, it may take 3-6 years to build a network marketing business. However, it'll be worth the effort to build something that'll pay us over and over again. We must stay focused and not get distracted by the next shinny object.
Robert Kiyosaki (author of the best selling book Rich Dad Poor Dad) says that we live in a world that finds it hard to focus. He goes on to say that if we want to be a successful, we must learn to F.O.C.U.S. (Following One Course of action Until Successful). This however, takes time, energy, effort and action.