7 Income Streams You Could Be Tapping Into
According to the IRS, most millionaires have these seven income streams:
1. Dividend income from stocks.
2. Earned income from a paycheck.
3. Rental income from real estate.
4. Royalties from products or license agreements.
5. Capital gains from the sale of investments.
6. Profits from business ventures.
7. Interest from savings, CDs, bonds, or other lending activities.
I would argue that most people have only tapped into three of these seven: earned income, dividends, and interest.
They spend their time earning a paycheck, saving what they can from that paycheck, and then investing the difference in hopes of making a return so they can reinvest and steadily grow their net worth.
This system works for a lot of people but it takes a very long time to reach financial independence.
The problem is your income from your paycheck is limited by the number of hours you’re willing to work.
On top of that you incur the opportunity cost of the time lost at work. Time that could be spent building new income streams.
So how do you escape this vicious cycle and tap into other streams of income to reach financial independence faster?
Becoming fiscally independent boils down to a two-step process, says Tom Corley bestselling author of the book Rich Habits: The Daily Success Habits of Wealthy Individuals.
Step 1: Accumulate wealth.
Step 2: Keep the wealth you’ve accumulated.
These steps sound obvious but it amazes me how many people only figure out one side of the equation or fail to execute the other.
Corley believes your ability to accumulate and keep wealth is directly tied to your daily habits.
From 2004 – 2009, Corley interviewed hundreds of people, both wealthy and non-wealthy. He asked each person 144 questions. It took sixteen months to turn that information into a usable spreadsheet. Then he wrote and self-published Rich Habits.
The rich were defined as individuals with an annual gross income north of $160,000 and net liquid assets of $3.2 million or more. The lesser-offs were those with a gross income of $35,000 or less and no more than $5,000 in liquid assets.
The most important Rich Habits discovered were the following 16.
Live within your means
Wealthy people avoid overspending by paying their future selves first, says Corley.
They save 20 % of their net income and live on the remaining 80%.
Every week, 77% of those who struggle financially play the lottery.
Hardly anyone who is wealthy plays the numbers, says Corley. Wealthy people do not rely on random good luck for their wealth.
They create their own good luck.
Read every day
Among wealthy people, 88% read 30 minutes or more every day. Just as important, they make good use of their reading time:
63% listen to audiobooks during their commute.
79% read educational career-related material.
55% read for personal development.
58% read biographies of successful people.
94% read current events.
51% read about history.
11% – only 11% – read purely for entertainment purposes.
Don’t Watch TV or Mindlessly Surf the Internet
Two-thirds of wealthy people watch less than an hour of TV a day and almost that many – 63% – spend less than an hour a day on the internet unless it is job-related.
Control Your Emotions
Loose lips are a habit for 69% of those who struggle financially.
Conversely, 94% of wealthy people filter their emotions, says Corley. They understand that letting emotions control them can destroy relationships at work and at home.
Network and Volunteer Regularly
Almost three-quarters of wealthy people network and volunteer a minimum of five hours a month. Among those struggling financially, only one in 10 does this.
Go Above and Beyond in Work and Business
Unsuccessful people have “it’s not in my job description” syndrome.
Consequently, they are never given more responsibility, and their wages grow very little from year to year, says Corley.
Wealthy individuals, on the other hand, make themselves invaluable to their employers or customers.
Set goals, not wishes
Every year, 70% of the wealthy pursue at least one major goal. Only 3% of those struggling to make ends meet do this.
Successful people understand that procrastination impairs quality; creates dissatisfied employers, customers or clients; and damages other nonbusiness relationships.
Wealthy people try to knock off at least 70% of their daily to-dos, says Corley.
Talk less and listen more
A 5-to-1 ratio is about right: You should listen to others five minutes for every one minute that you speak.
Wealthy people are good communicators because they are good listeners.
Avoid toxic people
Of wealthy, successful people, 86% associate with other successful people.
But 96% of those struggling financially stick with others struggling financially, says Corley.
Don’t give up
Get a mentor
Among the wealthy, 93% who had a mentor attributed their success to that person.
Mentors regularly and actively participate in your growth by teaching you what to do and what not to do. Finding such a teacher is one of the best and least painful ways to become rich.
Eliminate “bad luck” from your vocabulary
Poor people believe luck has everything to do with their current situation.
Wealthy people try to make their own luck and eschew a helpless attitude.
Find your purpose in life
It’s the last Rich Habit, but it might be the most important.
People who pursue a dream or a main purpose in life are by far the wealthiest and happiest among us.
Because they love what they do for a living, they are happy to devote more hours each day driving toward their purpose.
Odds are, if you are not making sufficient income, it is because you are doing something you do not particularly like.
When you can earn a sufficient income doing something you enjoy, you have found your main purpose.
Believe it or not, finding this purpose is easy, says Corley. Here’s the process:
- Make a list of everything you can remember that made you happy.
- Highlight those items on your list that involve a skill, and identify that skill.
- Rank the top 10 highlighted items in the order of joy they bring to you. Whatever makes you happiest of all gets 10 big points.
- Now rank the top 10 highlighted items in terms of their income potential. The most lucrative skill of all is worth 10 points.
- Total the two ranked columns. The highest score represents a potential main purpose in your life. Presto!
You are your habits. The more Rich Habits you can build the more you’ll earn and the more you’ll be able to invest in passive income streams to free yourself from trading time for money.
To a richer life,
— Nilus Mattive
Editor, The Rich Life Roadmap