Producing multiple streams of income can have a big impact on your finances. An extra $500 per month could go a long way in paying down debt or raising your investment.
Diversifying your income streams is important, especially in today’s tough economy and the unpredictable downturns in markets. You decide how you want to produce the income. Either you ‘do something’ to generate the income, this is active income such as providing a service, or the income is generated without you having to ‘do anything,’ this is passive income such as rental income. Just make sure you do not place all your eggs in one basket.
When I talk about multiple streams of income, I am not insisting that you get a second job to supplement your current income. A second job does not provide you with the flexibility and freedom to increase your income. In fact, it can hurt you when you think about it. You are trading time for money and in the long run, you lose! I want you to create something that will allow you to give yourself a pay raise when you need and want it. Â
When evaluating and researching ways to produce income, take the following into consideration:
- Investment — should require minimal investment.
- Sustainable — ultimately, something that generates income without you.
- Scalable — produces substantial amounts of income
- Flexibility — you call the shots. Â
Here’s what an extra $500 per month could look like. Â
Savings account: If you deposited $500 each month for one year with an interest rate of 4.00%, compounded annually, and an initial starting balance of $500, your yield will be $6,629.22. Â Â
Investment account: Now transfer the amount above from your savings into a 5- year CD with an interest rate of 2%, compounded annually, for five years, your yield will be $7,319.99.
Financial freedom: Extra income of $500 per month could cover car payments, auto insurance, help pay down credit card debt, or cover some or even all of a mortgage payment. Before saving, research rates, get your kids involved, and have fun with it. Â Â
Small incremental savings can ultimately go a long way. Below are steadfast ideas guaranteed to help you generate multiple streams of income this year.
- Sell an e-book
If publishing a book the traditional ways is a long shot, then consider an e-book. An e-book is simple; many people publish them for free, but many sell them as well on Amazon.
- Affiliate marketing
If you have a blog or other type of site, you can build affiliate links to different services on the website.
- Write a book
A well-written book will undoubtedly rake in some profits for you. Although the process of getting it published is sometimes tedious, it is not entirely impossible. Contrary to what many believe, self-publishing can be easy, fun, invigorating, and life changing!
- Begin a little business
Many of the above examples are also small businesses. However, you can start a more traditional kind of business–one that sells a service or product. Consider the one thing you’re good at or the one thing you are constantly complimented on. Before starting, make sure you have all the legal documents in alignment.
- Teach a class
If you have excellent skills or knowledge, then consider teaching at a university; make a series of seminars or make your own classes at your business.
- Offer consulting or coaching
Instead of teaching a full class, you can coach clients one-on-one.
- Start a blog
It may take a while for a blog to earn any money, as with any business, but with consistency and commitment, it will eventually pay off.
- Develop a product
A typical way of making money is to transform a service into a product. For example, as a freelancer, you offer a service once and earn money once. However, if you can change your service into a product, you can put it up for sale once and get paid lots of times.
- Have multiple clients
If you depend on one main client only, slowly begin branching out to fresh customers. Â Build your client list through list building. Â
- Launch a magazine
You can select a topic, develop content, transform it into a perfect magazine and sell it for a profit.
- Expert advice on clarity
The technique here charges for calls from people who want guidance in the topic/field you are knowledgeable in.
- Make a membership website and get money
If you can make valuable content, there will almost forever be people willing to pay a monthly fee for membership.
Stocks, bonds, 401(k)s, annuities, etc., are great ways to earn passive income. Place proceeds in a high-interest savings account or a high-interest checking account to establish your emergency fund account.
- Real estate
Real estate is a good way to earn extra income. Real estate investing includes fixing and flipping houses, which requires capital in the form of cash and credit. Speak with seasoned investors and realtors to find out if this passive income strategy is right for you.
Producing additional income is the foundation to building wealth. While earning extra income does take work, the ROI can be enormous and pay off for years to come. Now’s the time to create your plan for building your financial legacy for you and your family. Â
This article was written by BOSS Network Influencer, Dr. Cozette M. White.
Dr. Cozette M. White is an acclaimed author, financial analyst and tax strategist, speaker, and philanthropist. Not to mention the founder and CEO of My Financial Home Enterprises, a financial management firm helping entrepreneurs and organizations develop solutions that fuel business growth and transform products into accelerating profits. Â
Learn more about Cozette via her website at http://www.MyFinancialHome.comÂ
Follow her on TwitterÂ @cozettemwhite