Most of us think about retirement and panic. It can be tough trying to figure out how we’re going to survive and plan for our futures when we’re just trying to make ends meet right now. If you’re strapped for cash at the end of every month, chances are you are not saving anything for retirement or for that rainy day. Although many of us have 401k’s, we cannot rely on these for our sole source of retirement money.
It’s easy to think that your 401k will always be safe, but this is not always the case. Companies go under, investments go bad. Never rely on this, or your Social Security benefit as the sole source of your future income. The key to planning and financing your future is creating multiple streams of income right now.
80% of Americans are living paycheck to paycheck right now. That means that millions of us are facing homelessness if we lose our jobs. This is a startling figure and it really drives home how important it is to have more than one stream of income coming in every month. If you are relying on your paycheck right now and it barely meets your needs, think about what would happen if that paycheck disappeared? How would you pay your bills?
Setting up multiple streams of income can be a bit daunting, especially if you have no capital right now to invest. There are many different ways that you can create multiple streams of income, even if you don’t have much money. First, let’s look at creating active streams of income, then we’ll move onto passive. Active income is something that pays you money for work that you do. This can mean getting a second job for a few hours every week, or channeling your talents into extra work.
For example, if you’re handy at fixing cars, consider setting up your own little shop in your garage. Only take on as much work as you have time for, and you’ll be bringing in extra money every month. If you’re good at something, and most of you are, there is a way to leverage that into more income.
Now, let’s look at passive income, or income that comes in requiring no extra work on your part. This is the best kind of income and it’s important to have at least one passive stream. Passive income includes returns from investments, or dividends that come in. If you don’t have any money right now, consider getting a small loan to invest in a proven stock or to put into a high interest bearing account. This is called leveraging debt and it is a concept used by millionaires across the world.
You can also get passive income from rental properties or from buying homes and selling them at a higher cost. Talk with a financial planner about your passive income options and take that step towards achieving your financial freedom. You don’t have to rely on one paycheck!
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Originally posted 2008-11-28 21:12:10. Republished by Blog Post Promoter
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Diversification, Financial Security, Goal, Income Streams, Personal Finance, retirement
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2 comments ↓
Believe me you can not rely on one source of income, especially in this economy. I personally always try to have a few sources of income in case one were to greatly diminish. I have also recently purchased a rental property to build my equity.
These are all good points. We need to be ready for what life might throw at us.
I don’t count on Social Security at all. I assume that it won’t be there when I might want to make use of it. I count only on myself, and that requires me to create multiple revenue streams from writing, selling, consulting and advertising.
In addition, I’ve positioned myself in the debt-free category, and I’m doing my best to eliminate recurring expenses that are within my control – food, energy, maintenance and repair. That leaves me with taxes, insurance and discretionary spending as my largest regular expenditures.
Whether you’re trying to trim down expenses or develop multiple streams of income, or both, it needs to be something that you have on the radar screen now with an “end game” in mind.
I have a 5 year plan to become independent of the grid and the grocery store, and to have my multiple revenue streams completely supplanting Social Security and then some.
The key is to see into the future, make a plan, and then start working on it so you don’t have to “eat the elephant” all in one bite just at the time you really need to. I’m trying to create a foundation now and build the momentum over the next few years so I can coast into retirement without worry about where my next meal is coming from.
Clair
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