Wednesday, July 26, 2006

Multiple Streams of Income

My father had a job with one company for over 30 years. He retired with a decent pension.

I worked for one employer for 27 years. Then they replaced me with someone younger, cheaper and didn't get 5 years of vacation every year.

Most young people entering the workforce today can expect to have 11 or more different jobs. Will they ever get a chance to have 5 weeks vacation? Unlikely. Will they ever receive a decent pension? Unlikely. Can they expect to have to start over and over again at the bottom of their pay scale? Yes sir. Can they expect extended periods of unemployment due to "unplanned" job terminations? Yes ma'am.

How do we protect ourselves? We all have a desired lifestyle. To own the house and car and take the vacations we deserve, most of us borrow the money. Paying off these debts is no problem as long as we are working. But what happens when the work ends? Carrying that debt without ongoing income from a job can be nerve-wracking.

Putting money away for a "rainy day" is obviously the best advice you can get. But most of us do not think about digging the well until we are thirsty.

So, of course it is a good idea to save money for emergencies and "wage gaps". But I have a better suggestion... develop additional streams of income. Money that comes in even if you are not employed at a job.

Four Souces Of Income

Robert Kiyosaki, in his book Cashflow Quadrant, revealed to the world what the wealthy know. There are only four ways in this big, wide world of ours to make money. This is a book you need to read. Kiyosaki teaches what the education system doesn't. Once you know this stuff, you can't unlearn it and you can't pretend it isn't true!

Kiyosaki uses the diagram on the book cover to describe the only four ways to make money:


The vast majority of folks in the world are on the left side of the quadrant, they either work as Employees or Self-Employed people, the accepted figure is 95%. The other 5% earn their living on the right side of the quadrant. The people on the right side are the ones that know things about wealth that those on the left do not know. They hold about 95% of all wealth.

Here is how the quadrants break down:

Employee
Trades their time for money, either hourly or on salary
Works for a system
Not paid what they are worth
They are paid what the job is worth
There is an absolute earnings ceiling for every job
Lose your job – lose your income

Self-Employed
Trades time for money
The self-employed person becomes the system
Earnings are totally up to your own effort
Subject to up and down business cycles
There is still an earnings ceiling based on how much work you can do and how much you can charge
Don’t work – lose your income

Business Owner
Owns a system that generates income
The Business System allows them to make money even if they are not there
Only limited by the degree of leverage they can exert
Don't work – your income continues and might even grow

Investor
Invests in multiple Business Systems
Does not work for money; the money works for them
Earnings are passive and not dependant on personal effort
Don't work
This quadrant is the goal of all people

Most of us are a smidgee short of being able to live off of our investments. What we need is a B-quadrant business that will generate income without us having to trade an hour for a dollar.

Kiyosaki is a strong proponent of real estate investment as a great B-quadrant business to get involved with. But not everyone is suited for becoming a landlord. In his other book The Business School For People Who Like Helping People, he describes the benefits of having a network marketing business as a recommended method of developing an alternative B-quadrant income stream.

If product sales isn't your thing, join the No Limit Success mailing list and I'll send you some information on a word-of-mouth referral business that operates on the network marketing model but doesn't require product sales. It is an Internet business that delivers results.

Other online methods of developing those additinal streams of income include:

  • EBay businesses
  • sell or advertise your services online
  • selling your own information products
  • web site affiliate marketing
  • search engine advertising referrals

The important thing is to get your eggs into more than one basket. Find a business with a proven business system that will let you develop income without you having to put in an hour for every dollar you earn.

I wish you No Limit Success

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