The Case (Need) for Additional Income Streams

James Duffy

Photo by lucas Favre on Unsplash

Conventional consensus *knows* that the average millionaire has seven streams of income.

 

I have searched high and low for a study that corroborates that stat and have not found one. In the world of personal finance gurus on the internet, it has been so oft-repeated that it is now accepted fact. Case precedent, if you will.

 

So, wives’ tale or not, let’s make a case for at least one more stream of income.

The Case for An Additional Stream of Income

 

Inflation has been with us for a long time; most obviously trackable since we left the gold standard in 1971. Our parents – or grandparents – recall the gas lines and tight budgets of the late 1970s. And the boom years in the economy of the ‘80s and ‘90s.

 

We don’t like paying north of $4 a gallon for gas at the pump now…and first-time homebuyers have sticker shock when they start their home search today.

 

But through all that time, the dollar has been inflating away value. Things are ‘worth less’, and therefore take more dollars to obtain.

 

To be fair, incomes have been rising. They would have to. We couldn’t survive if they didn’t.

 

I talk to people about income, saving, investing, and dreams all around this thing we work for every day – money – on a regular basis.

 

And since we spend so much time thinking about and working for money…of course, our self-identity is tied up with what we do for a living to earn those dollars. Necessarily so.

 

And because our identities are so tied to our employment, I get it. To rock that boat is to rock our self-worth.

 

A problem lies just beneath the surface of that auto-identify, though.

 

The problem is, that income could go away in an instant.

 

We saw that with food and beverage professionals at the onset of the pandemic. We saw that with builders and lenders and Realtors back in 2007. And with marketers and programmers in the early dot com stage in 2001.

 

And several smaller-scale job losses in between those dates. And the next wave to come.

 

We’ve all seen the collective disruptions. Yet our self-image as individuals remains tied to our professional lives.

 

I concede that a really good Wall Street trader is a true professional and that a skilled welder is a true professional. And that becomes an integral part of our identity. That is good, and right.

 

The problem around that is that we then feel tied into that one thing, our one professional identity. And to venture outside those guardrails feels like we are being untrue to ourselves. “I am a crane operator” or “I am a comptroller” becomes our reality, and to venture outside of that feels almost like we are not, really, at the height of our profession. Like we are betraying ourselves…not to mention what that says to others around us, observing us.

 

Not taking anything away from that. You should be the very best professional you can feasibly be at…top of your game.

 

If your professional income is the only stream, though, then you are building a financial life on a balancing act of a one-legged stool. It works, you just have to keep everything in balance or the whole thing can come tipping over and crash. Embarrassing.

What to Add

 

A lot of adding income streams depends on you. If you have money, time, or expertise, you can add income streams. Not fully passive streams. But another income is just the same.

 

If you have money, great. We all know about – and your investment advisor will only offer – stock investing. Sure. Other options exist…contrary to your investment advisor’s track.

 

You can take your hard-earned and saved cash and invest in something fairly passive. Property, for example, is commonly invested. Buying a home to rent our mountain cabin to offer as a short-term rental is, generally, a very good income. Not too passive, but still a good return.

 

Putting some money together with others in a syndicate to buy apartments, as an example, is much more passive, offers a good income stream along with the upside potential of appreciation and a much-needed tax break. Much more passive.

 

And, more opportunities exist these days to invest in companies as well. Small and medium businesses often need capital in either debt or equity structure, and you can get a nice return there…also somewhat passively, as well.

 

Those investments can often take $50K, $100K, or more. So they are good if you have money set aside. A way to make that money work for you and have a little more control than just putting it in the stock market. I think you will enjoy exploring those options.

 

But what if you have a little money…but not $100K extra?

 

The concept has been around for a long time; but thanks to evangelists like Codie, the idea of leveraging into a small to medium business – a boring business, as she calls it – is gaining attention.

 

The idea is to buy an existing business using some money, but leveraging that buy with either seller financing or an SBA loan, and buying into some boring (read: always necessary business) with good cash flow. Maybe buying a laundromat or a car wash, or a vending machine route. You know – not the thing you will likely brag about at your next dinner party with friends. But it cash flows quite well just the same.

 

The alternative to that is building on what you already do.

 

Own a heating and air company? Maybe roll up other surrounding H&A companies into your own. Buy to grow rather than build to grow.

 

I could keep going, but you get the idea. Use some cash, leverage with an operator in place, and grow another income stream.

 

Finally, if you do have disposable cash, then you can use time or expertise to develop an income stream.

 

I recently was speaking with a friend who started a used car dealership and just got the license to also sell a cool bike and Boss Hoss. As we were speaking he lit up, “You are good at online marketing, and you seem to enjoy it. Why don’t you help me market these bikes, and I can pay $2K on every sale?”

 

You get the idea. You have the expertise, something you excel at. Opportunities are everywhere to leverage your time and expertise into additional income, and still, keep your identity and expertise in your job.

 

Time, talent, and treasure…the mantra every church recites when it comes time to ask all of us in the pew to step up our donations.

 

It’s really no different when stepping up and creating a new income stream. Time, talent, or treasure… or some combination of the three will get you there.

 

The important thing is to take action and add an income stream. If your day job – your identity – is paying the bills, then nearly all of the new income you create can go toward investing…creating yet another, more passive stream.

 

Oh, and be sure to use some of the new income to take a vacation. You deserve it!

About The Author

For years, 18 as of this writing, I have walked beside average men and women of all ages on a specific journey. The journey of home ownership.
And what I have discovered in opening up the financial reality of thousands of individuals & couples is a constant mix if fear, hope, confusion and achievement. It really is an exhilarating journey!
And I have read innumerable books on personal finance, read the blogs and listened to the podcasts, and spoken to the experts. And there always seems to be a bit of a disconnect between the theory of ‘personal finance’ and the lived reality of what is, truly, personal finance.

This is a place where real life meets real money. I hope you will come along on the journey to explore Finance, on the Front Line.

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