Whether we realize it or not, we all have at least one stream of income. For most people that is all they will ever have and it comes in the form of a job. But what if you were to lose your job tomorrow, would you still be able to survive? If you only had the one stream of income, and it dried up how would you replace that income? Could you replace it tomorrow, next week, or even next month? Do you have enough saved up to cover your expenses till you are able to replace that stream of income or would you be forced to take the first job that was offered in order to make ends meet? That is where multiple streams of income come in. Each stream helps to provide a little more security so that if one stream dries up we are not left high and dry so to speak and in today’s world having a little security can go a long way.
Ok, the first part of this post if very figurative, but what does it really mean and how can people achieve “multiple streams of income”. One of the easiest ways to add another stream is to just go out and get another job. Then you would have two streams, which is what we want right. No, not really. While it would provide a stream of income, it is an active stream since we have to actively be working at it for it to flow. There are only so many hours in the day for us to work at growing out active streams. I am reminded of an Amway parody a couple of years ago that kept referring to a “JOB” as “just over broke”, and there is no way for anyone to retire early if they are not part of Amway. It was a cute parity, but had a lot of truth in it. Not that I am suggesting anyone join Amway. While we want to create more streams of income, there are only so many active streams that we can work at. The type of streams we want to create are passive streams of income, but what is a passive stream of income?
A passive income stream is one that is achieved with as little effort as possible. That is not to say that it will require no effort, but that the majority of the effort will be required up front to get the stream flowing and once it is flowing it will continue to provide a passive stream of income. Hopefully forever!
The dream is that one day our passive streams will provide us with enough income that we can eliminate our active streams, and still maintain our standard of living.