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What are Multiple Streams of Income?
Multiple streams of income refer to having several different sources from which you earn money. Instead of relying solely on a single paycheck from one job or business, you create additional revenue streams. These various revenue streams can include such things as investments, side businesses, freelance work, earning royalties, and more. These streams can be active, where you trade time for money (like a job or freelance work), or passive, where you earn money without continuous effort (like investments or royalties). The concept of multiple streams of income helps to spread your financial risk and increase your overall income potential. For example, someone might have a full-time job while also earning money from renting out property, investing in the stock market, and selling perfumes online. Renowned entrepreneur and author Robert G. Allen, in his book “Multiple Streams of Income,” states, “No matter how hard you work, your money should be working harder.” This quote emphasizes the importance of not just earning from your primary job but ensuring that your money is also generating additional income through other means. It is important to establish that having multiple streams of income doesn’t always have to be from very different and unrelated sources. As a business owner, you can have one business outfit but choose to create diverse income streams from that business. So, the idea of multiple streams of income is not a function of “what?” but a function of “where?”Reasons Why You Need To Have Multiple Streams of Income
Financial Stability and Security
The most compelling reason to develop multiple streams of income is financial stability. In Nigeria for instance, job security is often uncertain and the economy can be volatile, relying on a single job can be risky. Unexpected events such as job loss, economic downturns, or personal emergencies can impact your financial situation severely if you have only one source of income. For example, imagine a young professional who relies solely on a single job. Now what do you think will happen to her if the company faces economic difficulties and decides to lay off employees? Of course, she may find herself without an income and with limited savings to fall back on. However, if she had additional sources of income, such as a side business or freelance work, the financial blow would be less severe. We have heard several stories like this in the past. While for many, being laid off proved to be the turning point or awakening they needed to move on to better opportunities or start a business, for some, the reverse was the case.Wealth Accumulation
Another important reason for diversifying your income streams is for wealth accumulation. By generating income from various sources, you can significantly increase your earnings and have more funds available for saving and investment. This approach allows you to leverage different opportunities and mitigate risks associated with any single investment.Achieving Financial Freedom
When we speak of financial freedom, we are simply speaking of the ability to live comfortably without worrying about money. This is a goal that almost every adult individual who understands how income and expenses work aspires to. Having multiple streams of income can accelerate the journey towards this goal. When you rely on various income sources, you are not tied to a single job or employer, which can provide greater flexibility and independence. As a kid, one of my uncles made me promise never to become a civil servant. The reason why he did so was that according to him, civil servants are not financially free. I believe his reason for saying this has to do with the financial habits of some civil servants who due to the security that comes with their jobs often become fully reliant on their job as their only source of income. This is not only applicable to civil servants but is seen with some other workers. So, what could you do? Assuming you are a teacher in a city like Abuja or just about any other city, you could supplement your salary by providing remedial classes or home lessons for students, tutoring students online, writing educational materials, and investing in dividend-paying stocks. These additional income streams can eventually surpass your primary income, offering you the freedom to choose how, where, and when you work.Thoughts from Experts
Many successful entrepreneurs and financial experts advocate for multiple income streams. Robert Kiyosaki, author of “Rich Dad Poor Dad,” emphasizes the importance of financial education and diversification. According to him,“The key to financial freedom and great wealth is a person’s ability or skill to convert earned income into passive and/or portfolio income.”Similarly, Warren Buffett, one of the most successful investors in the world, is known for his advice on the importance of multiple income streams. He once said, “Never depend on a single income. Invest to create a second source.” The late Ubong King, who refers to himself as “The Troublemaker”, was popular for his teachings on the need for multiple streams of income drawing reference from the Bible. According to him, the reason why God after creating the Garden of Eden put in place 4 rivers in the garden was to teach us that our financial garden needs to be watered from at least 4 sources of income. And a river went out of Eden to water the garden, and from thence it was parted and became into four heads. The name of the first is Pison: that is it which compasseth the whole land of Havilah, where there is gold; and the gold of that land is good: there is bdellium and the onyx stone. And the name of the second river is Gihon: the same is it that compasseth the whole land of Ethiopia. And the name of the third river is Hiddekel: that is it which goeth toward the east of Assyria. The fourth river is Euphrates. Genesis 2:10—14 (KJV) These insights highlight the wisdom of spreading your financial risk and building multiple avenues of income, ensuring that you are not overly reliant on any single source.
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Opportunities for Multiple Income Streams
Achieving multiple streams of income may seem overwhelming, but it can be broken down into manageable steps. Here are several practical ways you can diversify your income:1. Side Hustles and Freelancing
Leverage your skills and hobbies to start a side business. The best side hustle to start in this age is one in the digital space due to the flexibility it often offers. Whether graphic design, web design, copywriting, video editing, or even Facebook Ads specialist, there are numerous platforms like Fiverr and Upwork where you can offer your services.2. Investments
Investing in the stock market, real estate, or even small-scale agriculture can provide you with substantial passive income. However, if you are going to do well with investments, it is important to take out time to understand the fundamentals of investment. While investments can be a viable avenue to gradually build substantial wealth, it is important to be wary of the so many ‘get rich quick’ schemes that promise a faster way to wealth.3. Digital Products
if you are a professional and you are knowledgeable and experienced in you’re area, you can create and sell digital products such as e-books, training, or online courses. Let’s say you are an auditor who works with an auditing firm, you can create e-books or online courses that teach people and businesses how to carry out audits of their books internally according to the industry-acceptable best practices. Creating digital products can generate income for you with minimal ongoing effort once the product is developed. There are so many platforms where you can sell your digital products once created such as Selar.4. Blogging and Vlogging
If you have a passion for sharing your knowledge through writing, creating videos, or your voice, starting a blog, YouTube channel or TikTok can be profitable over time. Blogs, YouTube and TikTok have the potential to provide you with steady income streams through Ad revenue, sponsored content, and affiliate marketing. As is with many other ventures online, if you must do well in blogging and vlogging, you need to be equipped with the right knowledge about the platforms and the strategies for growth. Many creators can teach and mentor you in these.5. Online Tutoring
One major sector in which the COVID-19 pandemic brought great disruptions is the educational section. The pandemic opened us all to the possibilities of acquiring education, skills, and certifications from the comfort of one’s homes. Since then, there has been a steady rise in e-learning platforms. So, tutoring students online has become a viable income source for just about anyone. The Data Entry Academy by Chioma Ifeanyi-Eze is a good case in point. She launched the academy in 2021, offering online training to people in data entry skills and has since gone on to successfully make money and establish a name for herself through it. You too can. Platforms like Teachable and Udemy allow you to create and sell courses on various subjects.Some Common Concerns People Have About Multiple Streams of Income
Isn’t managing multiple income streams overwhelming?
While creating and managing multiple streams of income might seem overwhelming initially, it’s important to start small and gradually build up. This is why I stated that digital skills offer the best option as there are so many tools to help you manage your operations and your time. You can automate or even outsource certain tasks.How much capital is needed to start?
The amount of capital required depends on the type of income stream you are looking to create. Some, like freelance writing or blogging, require minimal upfront investment, while others, like product-based businesses, might require significant capital. The advice is to start with what you can afford and reinvest earnings to grow.What if one of my income streams fails?
The goal of diversification isn’t to prevent the failure of an income source but it is to reduce the risks associated with earning from just one source. So, with multiple streams of income, if one income stream fails, the others can provide a buffer. It’s crucial to continually assess and adjust your income streams to ensure they remain viable and profitable.A Real Life Example
I was once told of the story of Akin, an accountant in Lagos. When he began working full-time, he set out a percentage of his salary every month to save and to learn financial investment from a successful investment banker. After about two years, he started investing in the stock market while maintaining his full-time job. Over time, with his experience as an accountant and the knowledge he now has in investment banking, he also began offering financial consulting services to individuals. He started writing through his social media pages on the subject of personal finance and investments, growing a following through it. He moved on to create various online courses on personal finance and investments that people paid to access. Today, Akin’s income from side businesses far exceeds his salary and investments, giving him financial independence and security.Register to attend the CN Business Mixer
Concluding Thoughts
Having multiple streams of income is not just a strategy for the wealthy; it is a practical approach that can help anyone achieve financial stability, accumulate wealth, and become financially free. As a Nigerian, with the current economic realities of the day where a 50kg bag of rice is almost 500% of the minimum wage in the country, diversifying your income sources is now a necessity. It is probably the only sure way to provide yourself with a crucial safety net and open up new opportunities for growth and independence. This post has highlighted a few things you can consider in creating multiple streams of income – side hustles, investments, or digital products. Choose one from these to start with. If you can stay persistent, and continually explore new opportunities, you can enhance your financial situation and secure a more prosperous future for yourself.Got a suggestion? Contact us: editor@connectnigeria.com
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