One of the biggest myths in the business and financial world could be hurting you, your business, your finances and your future. Now what am I talking about?
You’ve heard of it. People advising you to make multiple streams of income. The concept sounds enticing and for the right person at the right time, it’s the right avenue to pursue. We all appreciate some extra money for bills, vacations, and cars. But when is the right time to work on multiple streams of income, and what is it?
When I was getting my career started, I heard of the concept and thought it was a very good idea. I wanted to diversify and have multiple streams of income coming in.
Why You Need To Start With One Income Source
So here’s what I did. I got into all kinds of businesses to make money: delivery, vending machines, and even stock trading on the side. I was building up my portfolio and trying to sell on the side in my spare time. And here’s the problem.
Even though I was busy with all these money making opportunities, I was broke. I didn’t have multiple streams of income. What I had was Shiny Object Syndrome. I was chasing whatever got my attention.
It was like I was drilling for oil, chasing a massive amount of wealth, by drilling a short depth and then stopping. And then drilling again for a short distance. I was drilling multiple holes but not going deep enough to hit oil. That was my experience with multiple streams of income. I wasn’t hitting the jackpot anywhere.
Here’s one thing that multiple streams of income never addresses, and it’s this. It takes a tremendous amount of time, effort and energy to build a business to develop that one massive stream of income.
This might counter what you believe – that rich people have multiple streams of income, such as a stock portfolio, real estate holdings, and multiple businesses. Yes, they do have these multiple streams of income, but not until they were wealthy.
Once you are rich, then diversify. But when you are building your wealth, focus on just one thing at a time, one idea at a time. Develop one massive stream of income first and then when you have a million dollars a year, then think about diversifying.
Here are some grim statistics: 97 percent of the population is dead or dead broke by the age of 65. Only 3 percent succeed financially, and the way the 3 percent is paid in life is different than the 97.
So instead of talking about multiple streams of income, I’m going to teach you multiple ways of getting paid. I’m going to show you seven ways you are paid in life.
Watch this video about the 7 ways you are paid in life.
Trading Time For Money: Method 1 & 2
The most familiar way we are paid is what they tell you about in school – getting paid by the hour. You get X amount of dollars for every hour that you work and contribute your time.
For example, at a fast-food place, you are lifting boxes and getting paid for every hour that you work there, but you don’t make very much.
Currently, the minimum wage is $7.25 an hour in the United States. About 80 million American workers are paid hourly rates, which represents about 58 percent of all wage and salary workers.
The second way you get paid is by salary, when you are paid every single week, every two weeks, or every month. These two ways of getting paid are what they teach you in the school system. However, there is a big gap between how much you are paid and how much income you need.
For example, in the city of Seattle, the median income is $79,565 but the income you need to be a renter is $115,722. In Philadelphia, the median income is $40,649, but you need an income of $82,439 to be a homeowner and an income of $92,639 to be a renter. The discrepancy is very wide in New York where the median income is $57,782 but you need an income of $148,448 to be a homeowner.
This vast difference between income and needed income makes you wonder. Are there other ways to make a living?
The rich don’t get paid per hour or per month. They get paid by five other ways that they don’t teach you in school.
Paid Per Project: Method 3
As a consultant, you can charge your clients to pay per two-month term or when you hit a certain milestone. When you reach an outcome or complete a project, you get paid for X amount of dollars.
You’re self-employed as a service professional. The Bureau of Labor Statistics for the US says that the total number of self-employed will top 42 million, compared with 126 million Americans working full-time jobs. With this method, you have the ability to charge what you feel you are worth.
Recurring Income: Method 4
I love the recurring method of generating income. All my students and mentees know that I’m all about generating more recurring revenue. Some examples in your life would be the subscription model for Netflix. You’re paying a monthly fee to have access to movies from the comfort of your own home.
You can pay a monthly fee for a data plan to watch TV on your cell phone. Why this recurring model is so powerful is the most expensive sale a business ever makes is the first sale. Once the company acquires the customer, the company gets paid a recurring fee whether the customer uses the service or not.
Now, there’s a way to maximize this concept. A friend of mine who runs a gym would oversell the capacity of the gym. For example, if the gym had a 500 person capacity, he would sell memberships to 1500 people on recurring. He knows most people who buy the membership don’t actually go there every day.
Some people sign a one-year contract and they go to the gym diligently for the beginning of the year and a few months later, they’re too busy to go. However, the gym owners continue to get paid every single month.
Royalties: Method 5
As an author who has written 13 books on Amazon, I get royalties every single time a fan of my work buys my book on Amazon. That’s the fifth way to get a stream of income – from books, music or movies.
Songwriters get paid by royalties, and people in the movie industry also get paid by royalties. They get paid 24/7, even while they sleep.
Singer Michael Jackson still makes an income from the royalties to his music. Supposedly over $800 million for music and other work he created years ago.
Pay By Transaction: Method 6
You’ve probably made a purchase yourself on eBay or Amazon, or you’ve made a payment through PayPal. Getting paid for transactions is another way to make an income.
Companies such as eBay and Mastercard get a payment every time you swipe your credit card or make a payment. Credit card companies aren’t providing any service except convenience but every single time you use their card they get a transaction fee. It’s how they make billions of dollars.
Paid By Results: Method 7
Entrepreneurs get paid by results, which is income stream method number seven. An entrepreneur can spend months, even years working a project until they can produce results in the marketplace.
For example, if a company is making 10 million dollars a year and I want to help them grow to 20 million dollars a year, I can help them do that. I could make ten million dollars in sales for them. With the deal, I get five percent of $500,000.
This is different than having a regular income, such as a weekly salary. It might take a long time before you get results. However, you can make a high income with this method.
Final Thoughts: Multiple Streams Of Income
In school, they teach the 97 percent how to make an income the steady way. You get paid hourly or weekly or monthly from the first two methods. The 3 percent of the population make an income from the other five methods.
For these other streams of income, you get paid for results. You can also generate income based on royalties, transactions, or recurring income. Some of these methods have delayed gratification. For example, you spend months working on a book before you get your first payment.
Similarly, if you are a closer who is closing sales, you don’t get paid if you don’t close the sale. The income is not steady with these other methods, but there is a lot of potential to make a higher income than with the first two ways.
These are the seven ways you can get paid when you reach a high income level. If you aren’t at that level, first work on building one massive stream of income. After that, diversify.
Which streams of income have you tried? Comment below.