How Many Income Streams Should I Have?

Find out why having multiple income streams is essential for financial stability and how to manage them wisely.

Build Wealth Using Multiple Income Streams

I’ve always believed in having multiple income streams to accumulate wealth and build financial security.

The problem is that it’s not the income streams that accumulate the wealth; it’s the person.

You could have 50 different income streams, but your dream of becoming a millionaire will never happen. If you are not managing the money properly

The key to investing your earned income is to live a frugal life, take the money you save, or utilize your skills and invest in an income stream that will yield returns.

How Many Income Streams Should I Have?

Ideally, have as many income streams as possible, but seven seems to be the magic number for many millionaires.

I do what makes me happy and follow my path.

Below, I will discuss what income streams I’ve used over the years and what we currently use to earn income to increase our net worth.

I will also skim the surface of some of the most popular income streams being used today.

Build Wealth Early With Multiple Streams Of Income

Dear Mr.CBB,

I’m just starting a new job after graduating from university and am now beginning to pay back my student loans.

In the meantime, I have rent to pay and everyday living expenses such as food, partial utilities, insurance, and so on.

Although I earn a decent starting income, I want to start working on adding various income streams.

It is a smart way to have a backup cash flow besides an emergency savings fund.

With so many people getting laid off in Canada, it’s never a good idea to rely on one source of income.

How many income streams should I have, and which yield the best results?

Thanks,

Chris,

Toronto, Ontario.

Building Income Streams Takes Time, Money, and Effort

Hi Chris,

What a great question. It is brilliant of you to consider incorporating multiple income streams.

Right off the hop, I will say that building multiple income streams takes time.

There are multiple income streams, many of which you can do from home or use your own skills.

Take what you graduated from and see if you can turn it into a side business.

You could start a blog or a YouTube Channel teaching people what they want to learn.

The opportunities for income streams are endless, but you need to find your niche.

Celebrities Building Income Streams

Take Justin Bieber, for instance, with his new line of Drew House clothes, or orRihannaa with her Fenty Beauty line.

Almost every celebrity has a perfume or cologne created as an extra income stream.

Try not to forget the multiple homes they buy and sell, as well as other business ventures.

It sounds a bit absurd when they are already some of the wealthiest celebrities in the world, but this is why they are.

Taking Risks On Extra Income Streams

Sometimes, we must leave that comfort zone and earn enough money to survive.

That’s essentially what most people do because they would rather be home than at work.

Earned income streams are one of the easiest, but also where many people end their income-earning journey.

Anyone Can Build Income Streams

The great thing about building income streams is that you don’t have to be rich to do it.

When I was young, I worked as a paperboy, and the money I earned went into the bank.

That earned income stream was used to pay for a car or part of my education when I went to university.

My parents did not make me save money, but they encouraged me to do so.

Buying and Selling for Profit

In my teens, I was a big music fanatic and would go to second-hand shops with my parents.

Then I would find some pretty good deals on vinyl, CDs, and even cassette tapes that I knew I could sell for profit.

Most of my buyers came from our little village, as not all of my friends could go shopping as I did.

We had buy and sell boards where I would list the music I had for sale and post my phone number.

Most boards were at local churches or the community center up the road from our house.

I made a nice profit by selling my music collection and entering the real estate world.

Keep Investing Your Wealth

When I turned 19, I bought my first flat (apartment) and later sold it with capital gains or a price increase since I had purchased it.

I could have taken the money from selling my flat and bought a house where I rented a room to help pay my mortgage.

This was a source of rental income, which was part of my extra income stream building process.

Most of it was experimenting; with experience, I learned what I liked and didn’t.

Becoming a landlord takes a specific type of person to deal with the pressures of tenants and issues.

My parents owned a few houses until recently, which were fully paid off by renting them over the years.

This is where I got the idea to earn rental income; however, when I moved to Canada, I sold the house.

Oddly, then I became a renter, but not for too long.

Ways To Accumulate Wealth

These days, our income streams come from earned income, passive income, interest income, royalty income, capital gains income, dividend income, rental income, and profit income.

Many income streams exist, but I will only discuss the more notable ones.

Understanding Various Income Streams For Canadians

Passive income is one of the easiest income streams, next to earned income, as it’s getting continually paid for already done work.

Earned Income- This is income you accumulate from your day/night job or the net income on your paycheque.

Interest Income- This form of passive income is where you earn interest, such as chequing or savings accounts. Also, if you lend money to someone for business investments or other reasons, charge them interest.

Royalty Income- These are income streams from people using your property to generate income, copyrights, patents, and trademarks. Also, natural resources or franchises are a source of royalty income.

Capital gains Income- When you buy a house for $300,000 and sell it for $600,000, you have capital gains of $300,000. Another example is when you sell investments or stocks with gains.

Dividend Income– Earning income from investments. When you buy shares in a company, the company will distribute its earnings to its shareholders, which is you. Canadian Blogger Mark at My Own Advisor, who is my blogger friend and dividend hero for all of the best tips.

Thanks in part to some recent dividend raises (thanks Royal Bank), I’m forecasting we might earn close to $19,200 by the end of this calendar year (December 2019) from our tax-free and tax-friendly account (TFSAs and non-registered respectively) as long as the companies we own continue to pay dividends at the rates they do.

• Rental Income- When you purchase property and rent it out to someone. This monthly payment goes towards your mortgage, which helps you accumulate wealth
• Profit Income- When you buy something and sell it for more money, such as the music I would buy as a child.
• Business Income- This is where you own a business and earn income from providing a service. This blog, for example, is a business where I earn extra income. You can also earn money from various social media platforms such as YouTube, Instagram, and Facebook. You can work from home, making and selling products or providing services such as making cakes, cookies, or building kids’ toys.
• Cash Income Streams– Using your skills to earn cash on the side, such as fixing vehicles, lawn maintenance, dog walking, companionship, online surveys, etc. We earned money for the first 3 years of owning our home by participating in a tax-free homestay program from the Canadian government. This extra income stream went towards paying off our mortgage in 5 years.

What Are Our Income Streams?

We naturally are a frugal family since we grew up in not-so-wealthy families and wanted to secure a financial future with less stress.

Over the years, we’ve dabbled in different income streams but have settled on a few that earn us extra money to put towards our retirement savings.

This is how we build our wealth:

• Earned Income
• Business Income
• Cash Income
• Profit Income
• Investing Income
• Interest Income

Explaining Our Income Streams

Eventually, we will have capital gains on our property, but we don’t fully realize that in our net worth statement.

Since we still live in the property, why don’t we see this as an income stream until we sell it and see where we go?

Our earned income sends me to work daily to bring home the bacon and do more work at home.

The good thing is that the work I do on this blog is scheduled, making life far easier for us as a family.

Income Streams That Earn Us Money

Creating this blog in 2012 began as a hobby but has since flourished into a business with a steady 5-figure income stream.

Interest income from our bank accounts isn’t much to brag about, but it’s money we didn’t have in the first place.

Profit income is part of buying and selling higher goods from shopping at second-hand stores and reselling online.

Investing in our retirement and insurance-type investments allows us to create an income stream for our and our son’s futures.

Our cash income stream isn’t so high, but it’s money we didn’t have for doing simple things such as online surveys or local focus groups.

We also make regular online purchases from Amazon Canada and other Canadian retailers and earn cashback through Rakuten.

Nielsen Home Scan is another source of income. When we get home, we grocery shop and scan our receipts for rewards, such as gift cards.

All the extra income streams add up to money we didn’t have, so we invest it back to continue building wealth.

Discussion: How many sources of income do you have? Drop me a comment below as I’d love to read your feedback on this topic.

Net Worth Losses and Gains

August 2019

What did we spend our money on in August?

Well, most of our cash went into the bathroom renovation costs over the past few months.

Even though we looked around for deals and bought large, expensive items on no tax days or took advantage of other deals, it still cost enough to affect the amount of money we spent for the month.

On the bright side, considering how much it would have cost to have a contractor come in, it was worth every dollar compared to me doing the work.

The other reason our net worth dropped is that the market didn’t perform well after the scare of inverted bonds.

The markets took a sharp nosedive and a subsequent rebound, but we made nothing on the investments.

However, we did regain our investments to almost the same amount they were worth; we just missed out on any gains that would have occurred if the markets hadn’t gone into panic mode.

Understanding Net Worth

What Does Individual Net Worth Mean?

Net Worth is a snapshot of your financial health, like a picture, or debt to net assets.

Simply put, it’s the total value of your assets minus your liabilities.

We credit the growth of our net worth to patience, perseverance, using a monthly budget, and not giving up.

Your numbers may go up and down, but don’t let the numbers scare you; rather, understand why and move on.

If you want to tour on a budget, I offer a FREE downloadable budget I created, which you can use at home just like we do.

I don’t charge for it because I want you to save money, not spend more!

There are many other free resources at Canadian Budget Binder to help you build your net worth.

Calculate Your Net Worth

Do you know how to calculate your own Net Worth?

WWewould ike to calculate our monthly net worth to see if we are still on track.

Some people calculate it yearly or quarterly, but it’s up to you and how informed you want to stay.

Net Worth is only an estimate, and not everyone uses the same type of figures to tally it up.

Some of you may not include vehicles like we do, or leave out assets inside the home as we have.

You might be the person who believes that your house should be excluded.

It depends on what you want to calculate or what you can sell today and make money on for tomorrow.

Figuring out net worth is relatively easy as long as you know your numbers or monthly finances, so you must do your homework.

Net Worth is simply adding up all your assets (what you own), then taking away your liabilities (what you owe, giving you a net worth number.

Understanding your net worth will help determine if you are on track to meet or beat your financial goals.

It doesn’t get any easier than that.

Determining Net Worth

How to Determine Net Worth?

Net Worth = Assets – Liabilities

Why not go ahead and calculate your own using our Free Money Saving Tool Net Worth Calculator (Canadian Budget Binder 2012)

Financial Numbers

When budgeting, anything is possible; we are proof of that, although we still have a long way to go in our journey.

These are our numbers and goals, not a means of comparison towards your own goal or others’ target goals.

We don’t care how much money others make, if they have a high net worth, or if it is lower than ours, as it’s not a competition.

I hope our experiences will help guide you along your financial path, working towards debt freedom.

Not everyone has the same path in life.

Some of you may have had to start over, like I did, or go to school again and have OSAP loans to repay.

Others may have divorced, lost money in the stock market or other investments, suffered job loss, fallen ill or been injured, but you can’t let that stop you from achieving your financial goals.

Some of you may have been given trust funds, paid-for homes, paid educations, or perks in life that give you a financial kick-start, and that’s OK too.

Earn It, Save It, Invest It, Build It

Remember what I said, “It’s not about how much money you make, it’s how you save it”.

People accumulate wealth only because they know how to save or invest it wisely, even if they inherited money or won the lottery.

The most minor improvements should mean significant strides in working toward your goals.

Sometimes we have to fail to learn, and we’ve all been there.

Money can be an evil force for some people, especially those with a negative attitude towards their financial situation.

I urge you to be optimistic, and little by little, with determination, you too should see improvements if you want that to happen.

Canadian Budget Binder Net Worth Updates 2019

Click the links below to read our net worth updates for the year.

• December 2018 -(1.66%)
• January 2019 (+2.37)
• February and March 2019 (+2.15%)
• April 2019 (+2.63%)
• May 2019 (-0.79%)
• June 2019 (+0.87%)
• July 2019 (+0.56%)

That’s all for this month’s net worth update, but please check in at the middle of October 2019 to see how we made out in September 2019 with our financial portfolio.

~Mr.CBB