Current Streams of Income

One of the areas I want to pay more attention to is developing multiple streams of income. I hope to dig into over the next week.

The concept is to develop income from multiple areas basically so that "all your eggs aren't in one basket". Lets face it, if I lost my job tomorrow I would be in bad shape. I am dependent on my job salary for monthly expenses and growing my net worth. By putting effort behind activities that generate income from different areas, I will be in better shape if something unexpected happens, as well as putting myself in a position to further increase my net worth.

Ultimately my goal would be to have enough income from different areas (other than my current job) to support my consumption. Then I would be much closer to becoming financially free.

Streams of Income
Today I have income from my job, the rental property, dividends, interest (mostly from 0% balance transfer offers), and a side business. Here is a pie chart (estimated) of where my 2006 income is coming from.

Looks pretty dismal. My job is bringing in all the significant income today. Since a large portion of my investable wealth is tied up in retirement assets thats not too unexpected. I just need to figure out how I can improve this picture.

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Comments (13)

I agree with you wholeheartedly.

My goal is to become an empire like the stars do. Look at JLo for example, she's got singing and acting (for what they're worth), clothing line, perfume, etc. If any one of them failed, she'd be good.

Granted, all of them have a support staff larger than my family, but the principles still apply. Diversify and spread it around.

Posted by Clink | December 8, 2006 10:12 AM

It's true that during the accumulation stage, the salary is the biggest source of income. Hopefully, in the future when the income from salary stops, other incomes can take over.

Posted by Sun | December 8, 2006 10:27 AM

this is an area my blog is going to focus on, too. At the moment, I'm trying to persuade my other half of the virtue of renting... Wish me luck.

Posted by investorblogger | December 8, 2006 11:48 AM

I think the fact that you have more than one stream of income is a good sign but you're definitely right that you need to start adding things. Being completely reliant on your job to bring in money isn't safe; loose that source and you're in trouble.

I think I'll have to follow suit pretty soon and start increasing the number of income streams myself.

Posted by Matt | December 8, 2006 12:40 PM

I'm starting to focus a lot more of my efforts on this as well. I'm starting to find an interesting dichotomy between saving for retirement (a stream of income that comes when I'm around 60) and building my streams of income for today. It's one reason why I track both of them on my site and try to update them regularly.

Posted by Lazy Man and Money | December 8, 2006 1:37 PM

I think I would feel very comfortable if my job represented ~50% of my income; maybe less in the future.

For now I think I need to look for ways to get it as close to 50% as possible.

Posted by 2 million | December 8, 2006 1:40 PM

Wow! Your post totally hit home with me. I've been focusing on this exact same thing. My challenge is that I have a pretty full life (a husband, house, baby on the way, etc.). What kind of additional income streams can I use that will not take away too much more time?

I think you must be in the same boat. You have a full time job, rental properties and a fiancee. How do you generate multiple income streams without sacrificing in one of those other areas?

Posted by Dixie | December 8, 2006 3:25 PM

Your job probably takes up the greatest portion of your time each day as well so I think it's pretty expected that your income stream is so dominated by your job. It'd be pretty impressive to be able to grow another income stream to the point that it was equaling your job income (which would be the case if your job only represented 50% of your income). Is that really a realistic goal?

Posted by Dan | December 8, 2006 4:38 PM

take some risks thats the best way people get too dependent on a job and then become wimpy and don't want to do anything else.

Posted by John | December 8, 2006 5:27 PM

You are well to think of developing the multiple streams of income now while you are still relatively young. Many professionals with good, high income jobs and steady pay raises get complacent (not about their job, they work hard at that, but about the concentration of income in one source). I could write you a long list of those who were summarily dismissed at my company from 6 figure + jobs at 38-39 (age discrimination law does not kick in 'till 40). The second round of firings occurs around 45-48 where they want to get you out while you still have some reasonable chance of re-employment (i.e. you won't sue or at least won't win alot).

Of course the plan to be fully financially independent by that age is your best protection, I guess. It's all about how you get there.

Posted by jj | December 8, 2006 5:45 PM

I would say keep focusing more on your side business(es). It is really easy to start up little businesses that take a small amount of time but bring in a decent amount of money every month, especially online. In fact, that is what I do for my entire income. I'm living proof that your "side businesses" can get to job-level income, because all I have are "side businesses", and I'm constantly growing the ones I have and creating more.

Posted by Alex - YoungFinances.com | December 9, 2006 10:59 AM

Good work 2mil. I would say my rental income totals about 20% of my monthly gross income (when I have no vacancies like now). Part of the high number comes because I rent out the basement of my house, which just counts against all of my housing expenses. I count the full amount as income even though I only count 45% of it at income tax time. This just makes it easier for me, and makes sense since any net income is just applied to my mortgage.

Posted by NLG | December 10, 2006 10:06 AM

Generating multiple streams of income takes a LOT of time and dedication. Anyone who thinks they can just dabble and create additional solid, viable income is just wrong. I don't mean to sound negative, but I'm trying to be real. I am working a demanding, 60+ hr/week job and also working on a very significant new side business with partners, and it is only at the expense of other things in my life, including time with family. This is all in addition to managing my investments and writing three different blogs. It can be done, but realize that it is very, very hard to do while balancing all other things in life.

I wrote a bit about my side efforts here:
http://retiringearly.blogspot.com/2006/11/moonlighting.html

Again, I don't want to discourage anyone -- just go into any side efforts with the right frame of mind so you'll be successful. There's no free lunch here.

Posted by fin_indie | December 10, 2006 1:13 PM