“The question isn’t at what age I want to retire, it’s at what income.” – George Foreman
Spend less than you earn! If you’re reading Lazy Man and Money, chances are good that you’ve already given some thought to alternative income. Everyone has a primary source of income. Usually it is a traditional job – an employer who asks them to show up from 9 am to 5 pm. Income can also come from self-employment, a small business, unemployment checks, a pension, or hundreds of other primary sources. Alternative income – which is sometimes referred to, incorrectly, as passive income – can come from rental properties, royalties, investments or other sources. All of these could also be primary income to someone, as well, but usually these are income streams that people receive in addition to their primary income. To be truly rich, though, one thing is certain – for every ‘stream’ of income you have, you should have an alternative. Alternative income is the key to wealth.
Most people have a single source of income. They work for employer XYZ and receive a biweekly paycheck. Some people may have a trickle of investment income, or occasionally hold a yard sale, but a large number of people consider catching up on the final season of NBC’s beloved quirky hospital comedy “Scrubs” a better use of their time than trying to earn more money after a tiring day in the office. Their goal is to get by on minimum work, minimum income and maximum “down-time.” Alterntative income seems like a lot of work to these people.
However, there are many advantages to finding alternative income. Having alternative streams of income means that no one stream can direct your life. Do you think you could tell your boss you were going to quit at the end of the month if your wage is your only source of income? Not unless you had an offer letter from your next ex-boss ready. But what if you had 15 streams of income? What if no single stream accounted for more than 10% of your total income? You could do a constant analysis and drop underperformers. You could drop streams that were inefficient, or frankly just made you blue. This is why being a consultant is better than being an employee. Consultants can have more than one ’employer’ at a time. No one ’employer’ becomes critical for putting Pepperidge Farm bread on the table. Being an entrepreneur or a small business owner is better yet, because then you have dozens, hundreds or thousands of ’employers.’
There are two more advantages to alternative income besides diversification of income sources. First of all is the expansion of skills. Creating an income stream from Prosper.com or eBay or a blog is a completely different skill set than being a financial analyst, for example. Even blogging about financial analysis is a different skill set than being a financial analyst. Every time you create a new revenue stream, you are expanding your skill set. You are learning something new, and making it that much more likely that you’ll be able to add further income streams.
This leads to the greatest advantage of alternative income streams of all. This is the viral nature of alternative income. I never thought there was any point in worrying about income past my wages and a quarterly trickle of dividends from my stock holdings. The truth is that when you start thinking about creating alternative income from writing, from blogging, from investing in Prosper.com, creating an eBay store, coming up with ideas for new consulting services or even thinking about opening a corner cocoa shop, you’ll find out that something funny happens. Your ideas will snowball. That first idea will spawn two more, and they’ll each create two more. You’ll see opportunities everywhere and even though many won’t work out, some will. The one that does will give you a lead to another stream. That stream will inspire you to create another. You won’t be content to sit back and wait for your corporate payroll department to mail you that never-changing check every two weeks. You’ll want more, and by wanting more you’ll find more. Once you understand that alternative income is the only way to real, long-lasting wealth every idea you have could be the start of something amazing.
So even if you come up with an idea for generating an extra $10 a month, don’t sneer at it. That $10 a month idea may someday serve as the basis for a $100 per month idea. That $100 stream may help you gain the skills and experience you need to have for a whole new stream that generates $1000 per month. If you see where this is going, you see the possibilities. Keep an eye out – you never know when you’ll come up with the next small idea that could turn out big!