Multiple Streams of Income (MSOI)


msoi

 

I was first introduced to this term by Bob Proctor, a prominent Canadian author and motivational speaker on matters of financial wealth, among other fields related to human success (the definition of human “success” varies depending on the paradigm we use).

The concept is fairly simple, but not simplistic. During and after the industrial revolution (1760-1840), most workers started earning their income through employment in factories and enterprises that supported factory work (banks, press, railways, post, mining, and so forth).

By the turn of the 20th century, more than 50% of the North American workforce had shifted to employment. Excluding the Great Depression period (1929-1939), that percentage had experienced an upward trend, reaching its peak during the era after WW2. Fewer people took farm jobs or started their own ventures. Large corporations absorbed small businesses, manifesting capitalism on a wide scale.

Most of the population had retired to a sense of financial security derived from a “guaranteed” paycheck. The widespread possibility of serving the same employer for prolonged periods of time had supported that disposition. Job security had been perceived as a reality.

The Information Revolution came to shake things up. By the mid Eighties, assured continuation of employment had taken a backseat. Clinging to a job that would end with a two-week notice turned out to be questionable.

Disruptive changes are not always bad. They serve the individual(s) who is open to learning and growing, riding the wave of change, instead of getting washed out by it. Rigidity is synonym to breakdown!

Where does all of that lead us to? Flexibility, autonomy, and being in command of one’s life. Blindly following the crowd is risky, and oftentimes, intellectually and financially fatal. Relying on one source of income in today’s economy is not a wise choice, to say the least.

What are the alternatives? Take multiple jobs at different companies? Work “harder” at the same job to the extent you forget your children’s names or birthdays?! Or rely on social programs, where they exist, to bail you out when the unfortunate happens?

None of these options is viable. We can easily discount the first once we consider the conflict-of-interest provision in any employment contract, let alone the strenuous stretch and excessive stress endured by the employee.

The second is possible, and so many people have traversed that rocky path. However, the impact on personal life is undeniable. Furthermore, those who put 70- and 80-hour work weeks are not immune to reorganization storms. Management by numbers has become the rule at the end of the day!

Social programs can help, but they are not enough. They are meant to supplement other incomes, not replace them.

Now we’ve come to a point in our study where we are ready to consider better alternatives. Alternatives that lay a strong financial foundation, upon which to pursue higher intentions. The tool must remain a tool. When making money becomes the chief concern amid the struggle to “make ends meet”, life loses its meaning, its exuberance and joy. Happiness seems like a mirage dancing on a sun-broiled horizon.

Here is a mathematical representation of the solution:

T = P + (n * S)

T: Total income

P: Primary income

S: Secondary income

n: Number of secondary sources

P could be a form of employment or an established business. What about S? It can be any legitimate, ethical activity that produces money in exchange for providing real value.

Investing is one example. Online stores, part-time teaching/training/coaching, freelance writing (blogging, publishing, technical writing), creating digital products and selling them online on sites, such as Amazon™ and ClickBank™.

You could discover more sources. The bottom line is to find something you love and have the skillset to produce, grow and maintain, without jeopardizing your personal life. Again, we’re building a foundation, not a whole structure.

I have covered investing in great detail throughout this blog. You can learn about online stores by reading this particular post: https://soaring-eagle.org/2012/07/04/making-money-online-online-stores/

Please share with us your comments and suggestions. This article is not comprehensive, as the possibilities are endless. Its aim is to open doors of exploration, to deliver the message that there is more to work-life than a single option…

 

The Wealth Maker

 

© Image Credit: www.windowssearch-exp.com

 

More on Budgeting


 

We started our discussion about budgeting in the last post. The question we concluded with, was: What is a budget? I like to keep things clear and simple. We could spend pages defining a budget, but that’s not our purpose here.

A budget is a spending plan! That is it. The more you have to spend, the more important having a budget becomes. It could be a simple spreadsheet, or it could be a 500-page volume.

The budget categorizes your spending, so it becomes easier to track. Then based on historical data (the accounting software we talked about earlier is handy here), the budget “allocates” a portion of the expected income to each category.

Now this is all projection. Why is it important? If you went spending without a plan, without some guidelines, you would, most probably, exceed the limits. Even worse, you might spend more on less-important categories than on essential ones.

Let’s have an example. What is more important than your children’s health? Without allocating enough funds to that category, you may end up taking some of that money to cover a less important area, such as eating out.

This leads to a very vital aspect of a good budget: Weights and priorities. Not all spending categories were created equal! Factor that in right from the start. Let your budgeting software know those priorities as it allocates the funds.

The other important element is allocation. How would you decide that, say, groceries would need $2000 this month? The easiest way is to track your spending for a period of time, that is relevant to the budget’s span. Therefore, if you were budgeting month-by-month, then track your spending for a full month, to get an idea how much you would need for the coming months.

Finally, a budget has a lifetime, like everything else! If you were responsible for creating the US government’s budget, then you would need input concerning, at least, the next 10 years, then prepare the current year’s budget accordingly.

Our focus here is personal/small business. In that environment, your budget should take into consideration your overall mission statement (personal, family and/or business), objectives, values and roles. Budget for a year, and have monthly sub-budgets to help you track more effectively.

Always put your investment money aside before you start this process, as if it never existed. We had talked about this before, but it is worth repeating here: Deposit a monthly percentage of your income in a separate account, which is dedicated to investing/growing your wealth.

 

The Wealth Maker