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Financial Freedoms: Why You Need Multiple Streams of Income

financial freedomsIt’s amazing how quickly things move when you are not paying attention. It also means that you have to continuously focus on taking steps forward. If you are striving for more financial freedoms it is important to move as fast as possible since we never know what the future holds.

A few weeks ago the importance of gaining financial freedoms was brought into to focus for us.

Someone very close to us was laid off due to some restructuring in the company. No signs, no warning, just a quick meeting with HR and a walk to the door. Just like that her financial freedoms were gone.

The typical thought that comes to mind is ‘Congratulations’, because it really is a blessing. This person had so much more to offer the world than what she could do within the confines of her job. Her duties were restricted to only a small part of her strengths. This was apparent for some time but the comfort of full time employment took its toll on her. She lost some ambition to pursue long time goals that were not yet completed. She allowed her job to define her skills instead of the other way around.

But most people aren’t looking for a congratulatory high five during times like these.

Our friend had given this company 3.5 years of her life while taking only her allocated 2 weeks of vacation every year. Surely, for sacrificing so much time (the most scarce and valuable resource we have), but there was some compensation coming her way.

We quickly found out that she was only entitled to one week of severance pay for every year she had committed to the company. Ouch! How’s that for a trade?

Even a tiny nation like Trinidad or Tobago gives a minimum two week severance pay for each year served.

Oh, and to be sure to dispel any myths her employer said they were ‘very happy’ with her performance and offered recommendation letters.

It wasn’t a performance issue.

It is ironic that so many of us feel that it is important to have control over our investments (generally, a superior approach), but when it comes to our main source of income we have no control whatsoever. This is no way to achieving your financial freedoms.

We can blame market forces, the economy, or anything else that comes to mind but that is no different than watching the value of your mutual funds fall and blaming the market.

The simple fact is that too often we put all our eggs in one basket, hand that basket off to someone, cross our fingers and hope that they will take good care of it. You can't create financial freedoms this way.

You may have no interest in becoming your own boss and starting a business. From experience, we can say it is no cake walk and it does take a certain type of person to make it work.

But why not have two baskets of eggs? That way if one is tossed aside by your employer there is something to fall back on. This is key to achieving financial freedoms.

Another Inner Circle member was recently hit by a serious medical condition that has had a big impact on her life. She had no job, but was self employed. This is a fabulous lady that gives everything she has got to every situation. Here is a tiny bit of an email she sent over.

“the only reason I have been able to make it this far has been the cash flow from my one property”

We could assume that the cash flow is between $300-$400 since that is the most common numbers we are currently seeing, but the amount is not what matters.

Financial strain can hit whether you employ yourself or work for someone else.

The important thing to realize is that she has set up a second income stream. So when her illness took the first basket and threw it aside, there was a backup in place.

The backup may not be as fruitful but it is making all the difference.

And for every year of effort and time she gives the investment, the tradeoff is much better than the entitlement from her employer.

The most surprising fact was that we already had these beliefs within us but when they are put in front of you again, with stories like this, it serves as a big reminder of the reasons we are all here work towards our financial freedoms.

Achieving Financial Freedoms

We had some great insight into this at the recent mastermind meeting we attended in Orlando. A set of business partners from England told us how their business was doing millions in annual revenue, but took a hard fall and closed their doors only a short period of time later.

Their main fault was the dependence on one, very specific type of business. It was the equivalent of having all your eggs in one basket. Again, not the right approach to financial freedoms.

There are benefits to being a specialist, but you have to be nimble to survive.

Two other guys we were speaking with own real estate, restaurants, and two membership based barber shops (a new concept that you will probably be seeing more of in the near future).

You can see that their eggs are spread out in different baskets. They chose these businesses because of the constant demand.

People always need housing, food, and hair cuts; solid logic.

Often the biggest breakthroughs are from that second stream of income. For example:

  • Apple was a computer company until Steve jobs unveiled the iPod which revolutionized the way people listen and purchase music.
  • An entrepreneur that started a side business while working full time growing it to a point where they could quit to run the business full time.
  • Real estate investors that start with one property and grow their portfolio to a point where it can cover living expenses.

One of the first books that brought this to light for us was “Multiple Streams of Income” by Robert G. Allen.

We can’t say we agree with every avenue of income outlined in the book, but the concept of having different streams is very powerful when you set it up.

Sure, some streams will carry more weight than others, but you will never be dependant on one and that's the point of financial freedoms.

Dan Kennedy often says, “The worst number in business is 1”.

It may not be what you are used to but your personal finances are a business, and they need to be run as such.

You have income, expenses, and a balance sheet just like any business. There are accounts payable, accounts receivable, payroll, taxes, etc..

So the same rule applies for financial freedoms.

Get away from the number 1. Work on growing that number. It won’t only bring you increased security but it will allow you to gain life long skills and financial freedoms.

You won’t have to worry about earning a weeks severance pay by sacrificing a year of your life.

It is easy for all of us to become complacent. The trouble is when we don’t control things and change can come without any notice. Very often it will be at one of the worst possible times.

Keep working towards your financial freedoms.

Visit our other site www.therealestaterenegades.com for more real estate investing articles.

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