Creating multiple sources of income

Before I start off this post, I really want to thank you all readers for being so supportive and encouraging through your comments! I really never expected to see my blog having so many readership in so little time!

Today I want to share my thoughts on creating streams of income from every direction. Although I’m not there yet, but I’m working towards that direction!

Income
Simply put, income is basically cash inflow into your bank account. The most basic of them all is your salary/paycheck. Most people only have one stream of income, their paycheck. I think this is really dangerous because you are fully reliant on your job. You will remain a slave to it as time goes by when debt begin to set in.

I always believed in having multiple streams of income because it gives me an ease of mind that even if one stream fails, I still have other streams of income supporting me. This makes me less stressed out about money and more enjoyment in building my wealth.

There are many forms of income. To list a few, there’s (1)Earned income, which is your job/business. (2) Portfolio income, dividend from your portfolio and trading activities. (3) Passive income, namely rental of properties or royalties. And there’s one category that I would call (4)Miscellaneous income, where it is not a steady stream of income. It comes only every once in awhile. For me personally, this would be doing online surveys. I have no absolute control on when these income comes, but it will come when I have collected enough points to redeem for cash.

There’s another area where I think plays an often neglected role in growing your networth, is rebates.

Rebates
Expenses is inevitable. They can be reduced, but not entirely. If we can mitigate our expenses, isn’t it almost like another stream of “backflow income”. As the saying goes, “Every dollar saved is a dollar earned.” Although they may not be much, but I think it’s the attitude of finding ways to grow your networth that is important. This attitude will carry on towards you looking for a good deal for income stream as well.

When we’re talking about rebates, we’re typically looking at credit cards, memberships, programmes, etc. Rebates in my opinion is a double-edged sword. When used wisely and diligently, it is a friend. Examples of rebates could come in the form of using certain applications, eg. Uber(Taxi), Perx(shopping), etc. There are so many free apps in the App Store that you could download to give you that extra rebates!

Credit Cards

A classic example would be a credit card. Credit cards often offer rebates, enticing people to simply pay with credit. I think many people however, fail to calculate the cost-benefit ratio.

Cons
I think sometimes we forget to ask ourselves, how much are we paying for the annual subscription and how much rebates are we getting out of it. Cost often outweighs the benefit unless we spend enough. The next question we should ask is “Am I spending on the inevitable expenses?” Because if the spending is not inevitables, likely you’ll eventually end up spending less over time, resulting in cost outweighing your benefits again.

Going cashless. It’s the in thing of this era – When spending doesn’t pinch you until the end of the month. In terms of convenience, I think there’s always the option of getting a debit card which not only costs less in terms of subscription fees, but also provide the same functions, albeit less rewards. Not only does using a debit card provide you convenience, it also prevents you from overspending because everytime you swipe, you know your networth just went down. (At least for me it does!)

Credit cards as we know, usually encourage people to spend beyond their limits. When we cannot control our spending, that’s when disaster strikes. Not only does the annual subscription hit you, you’ll end up paying interest on your debt of about 24% per annum. Then eventually go into a downward spiral of considering revolving credit, etc. It just snowballs from there and we all have heard of such stories.

Pros
Of course, as I mentioned before, credit card is a double-edged sword. If you can achieve a situation where benefits consistently outweighs benefits then I believe it’s worth getting one.  My advise would be to weigh the cost and benefits before getting a card in the spur of a moment, eg. short-term benefits. Because it’s not worth it when you don’t manage it well. Use it to aid you in increasing your networth instead of creating a new source of cash outflow.

Food for thought
I know this topic was titled as creating multiple sources of income, but I really wanted to introduce “backflow income”, which I thought is an often neglected area when considering income cash flow.

Hope this post helps you re-look into your income streams and start considering “backflow income”.

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