Many people are following similar paths in life when it comes to creating income. A 9 to 5 job is the standard and after graduation, many people seek that one big source of income. Over the years they are working hard to get an income as high as possible and to continuously receive that monthly paycheck to pay their mortgage and other expenses. It is so sad that many people do not know how to create assets to reduce financial risk.
That’s why job security is very important for most people and the confidence in it is enormous. How sustainable is this job security in reality?
The security of job security?
Nowadays many organizations are not as stable as they were in the past and re-orgs and strategic changes are not an exception but a common organizational practice.
I know lots of people that have great skills and a fantastic CV and still lost their job due to a re-org and became unneeded for the company they were employed by.
Losing that one source of income – or even the fear of losing it – creates financial stress and you suddenly have nothing anymore. Uh, oh… the bills and the mortgage payments are still there.
How are you going to pay for that? Can you still afford your dream house? Are you fast enough to find a new job to pay for all your expenses or do you have to start selling things? One source of income is pretty rigid and inflexible, don’t you think?
Let’s see how you can create assets to reduce financial risk.
Create assets to reduce financial risk
Sticking to this 9 to 5 job and working hard for a decent income can be a good thing but is also a risky strategy. Besides that, it’s also one that is heavily taxed by governments. Having multiple income streams reduces the risk of losing all your income at once.
Having only one source of income is a risky strategy
So how can you create multiple income streams? You only have a maximum number of hours in a week, right? Do you have to work more and harder to achieve this? Find a second job? No, that’s actually not the case.
Creating multiple income streams is more like a mindset. There are a lot of ways to accomplish this and the only thing you need is a bit of creativity.
Becoming aware of the kind of work that you do is the first step. Are you exchanging your time for money or are you building an asset? Most of us are exchanging time for money. Assets, however, can generate an income even when you lost your job or when you become ill.
What is an asset and how can I build it?
A lot of times you have to work to create an asset and the work that you put into the asset doesn’t generate you probably any money from the beginning but it will in the future.
An asset is something that generates an income for you although the time you spend is not necessarily directly related to that income, it’s more like a delayed income. This sounds a bit vague, right?
To put it more simply: an asset is something you own that you use to create money for yourself. Assets can be created in many sorts and forms. It just needs some creativity to create one.
An asset is something you own that you use to create money
Let’s explore some examples of assets that you might build:
Zipcar as a simple example
Think of something that you own and that costs you money, for example, your car.
Many times your car is not being used by yourself and is parked in the street and standing still. Most cars are parked for longer periods than they are actually being used.
Strange and a real waste of money!
You can also make your car into an asset and start earning money with it. How? Put your car on car-sharing sites like Zipcar and share it with people in your neighborhood.
Suddenly your car is making money for you and you turned something that cost you money into something that generates it > an asset. You can put all the earnings and expenses in Excel to see if you are profitable.
As you can see, using your car as an asset is a very simple start in building your first asset, because when your car is parked you are simply not making any money from it at all.
Start with your current belongings
Creating multiple income streams is like a mindset. Once you start looking at your belongings this way, you will start seeing all the possibilities and everything you own becomes a potential moneymaker. Maybe you have a boat which you can rent out. Or perhaps you have a room in your house which would be great for a student.
Everything you own becomes a potential moneymaker
You can also take creating assets to the next level. This includes investing in assets purely to create multiple income streams. Rental properties are a great example of this. Or you can start a blog and share your knowledge on a certain subject as an asset.
In addition to using assets to create an extra income stream, it might also be interesting to think of creative ways you can use your assets to decrease your spending.
For instance, you can use websites like Home Exchange to cut on your holiday spending for example. You can literally save thousands of dollars on your holiday. Why stay in an expensive hotel when you can swap for free with someone else that wants to stay in your house?
You can build assets in lots of ways and there are literally no limits in how to do this. It’s all about the mindset and seeing the opportunities. You can turn things that cost you money into income generators. The main idea is to lower your dependency on one income stream by creating multiple ones.
When you start small (with Zipcar for example) you can easily build from that. Adding more and larger assets over time. This process accumulates very fast, because of the extra income you are generating.
Before you know it you are the owner of a couple of rental properties and you can live from your assets without the 9 to 5 job 😉