There’s an old English saying, “don’t put all your eggs in one basket.” It simply highlights the idea that one mustn’t risk everything for the success of one venture, which is what young people do when they depend on only one stream of income- SALARY.
Studies have shown that an average millionaire has seven streams of income- a combination of active and passive sources of revenue. They believe that spreading the income streams is an excellent way of earning more money, and it reduces risk even if one source of income fails.
So here’s a list of the seven streams of income that you must have in your 20s-
Earned income is the primary income stream through a job. Most of us start here, and many of us go no further. For the majority of people, earned income is very limiting. Thus, it has attracted the acronym, ’Just Over Broke!’
In simple words, you just earn enough to survive. Of course, some jobs pay exceptionally well, but these are exceptions, not the norm.
You can earn some extra income, alongside the earned income, from the businesses you have set up. These are commonly known as your ‘side hustles’. The business income could be made up of just one source or multiple sources.
It is typically found among your balance sheets, taking the difference between profit and loss. By selling a service or product for more than they cost you is the basis of profit income. You can open a retail store, sell products online, or you can offer professional services and charge for your time.
If you have spare cash sitting in the bank account, it is losing its purchasing value since the interest rates are meagre these days. There are many alternatives that can put your money to work and earn a passive income stream.
It is better to invest it in Mutual Funds or a savings scheme such as FD or RD and use the power of compound interest to gain an interest income. Buying government bonds is yet another safe investment that will generate interest.
Dividends are commonly known as a share of the profits. When you buy shares in a company, you become part-owner of that company and are entitled to dividend payments.
Well-timed investments in companies can generate excellent dividend income. You can split your profits into annual, quarterly or twelve-monthly dividend payments.
Property investment is a great way of protecting your money. Once you own property, you can generate an income from rent as an added monthly income stream.
However, there are two downsides to this income stream. First, it requires a substantial investment initially, unless it is part of an investment scheme. Second, releasing the cash at times can be time-consuming and costly, so if you need the money quickly, this one is not for you.
Buying and selling assets provide you with an income known as capital gains. For instance, if you buy stocks and shares worth 500 and later sell them for 550, the capital gain is 50.
It is generally advised to consult an accountant first about the capital gains since each country has different rules. Depending on the asset sold, the capital gains tax may wipe out all of your profit.
If you are a creative individual and are fond of producing music or photography content, it’s time that you turn your passion into an income stream. Licensing your content for specified public usage can help you create royalties as an extra stream of income.
Royalties are not likely to be significant on their own, but mass production usage of your content is expected to bring in a steady stream.
So if you are in your twenty-somethings, it’s the right time for you to adopt the structure of 7 streams of income to fast-track your journey to becoming a millionaire. After all, the goal is to achieve financial freedom as young as possible, because what use is your millions if you are too old to enjoy them anyway?
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