1196: Never Depend on a Single Income by Craig Stephens of Retire Before Dad on How to Create Multiple Revenue Streams


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And I'm Dan I'm your host here on the podcast I'm here each and every day reading to you from the best personal finance blogs anywhere and for more podcasts covering a lot of different topics, we actually have five different shows. You can check them all out by searching for optimal living daily wherever you're hearing this, but for now since you're here, let's get right to it and start optimizing your life. Never depend on a single income by Craig Stevens of retire before Dad dot com. Quote never depend on single income. Make investment to create a second source. Warren Buffett. Both quotes are usually more eloquent. My grammar-checker hated this one, but it's one of my favorites because he sounds like a caveman, and it's one way I like to think about investing as a secondary source of income, it might as well be a quote from a caveman, because the concept is so simple and obvious, we're programmed to focus on our careers as our only income source study hard get a job rely on the job for a salary, healthcare, retirement savings and social life. Maybe this way of thinking is leftover from our parents, generation and their employer loyalty pensions and gold watches. Our best to stay employed, but lose job. And suddenly the government is expected to step in and save the day when I lost my job in twenty seventeen, I didn't apply for state unemployment benefits. We lived off nineteen thousand dollar emergency savings, fund and seven income streams. I built before being let go. One of those income streams is a side business I built while I was fully employed. It produced a decent income and gave me something to do while I searched for my ideal job. Americans often borrowed too much money to buy the nicest house and car. They can mathematically afford. Everything is fine as long as they stay employed, and the economy remains on sound footing, but crossing fingers, and hoping things stay good is a bad plan. The way to avoid financial troubles, even in a depressed economic environment is to borrow far below your means or not at all build a significant emergency fund and create secondary income streams to supplement your primary income and grow wealth or marry someone with an income. Doing these things gives you options if your employment situation changes and it might. Perfect Time Caveman buffets quote suggests you take some of the money you are, and put it towards investments that way, if your primary income is lost or pauses due to a government shutdown. Or whatever life throws at you? You still have money coming in to help. Pay The bills hopefully on top of a healthy emergency fund when buffet says investment, we assume he means stocks. He's a bit old. Fashioned stocks are great for long term growth and income, and it's easy to get started nowadays, but there are endless ways to invest to earn additional income streams, and not all our financial investments in January. This year I wrote a post about the five best investments for. For long term growth, the first recommendation was to invest in starting a low cost side business, starting a business may have associated costs to get started and operate, but there are hundreds of legitimate business ideas, the cost very little to ramp up returns on a successful side business can be very high, and there's no pressure to make it a full-time GIG real estate, alternative investments and investment in education or other ways to invest in helping to never depend on a single income again. However all of these investments require the most important asset of all your time. Though some of these income streams may eventually be passive, each requires an upfront time and vestment. If you invest enough time in exploring ways to build additional income streams, you'll find something that eventually works for you. CAN YOU MAX it out. We all know we should be saving for retirement whether we are not getting started. Investing for retirement is one thing maxing out is another only thirteen percent of workers with 401K's maxed out their contributions in two thousand seventeen. I recommend maxing out your employer sponsored plan if you have one or maxing out a traditional IRA if For most people that's a challenge, but start small. Then try to increase your contributions each year until you. The Max set a realistic goal to get like five years after maxing out my four zero three B our family is also contributing the Max to MRS RB, DIS, spouse ally Rae my Roth IRA and we're executing our college savings strategy. I do all of this before investing after tax money into dividend, stocks and real estate crowdfunding do not save what is left after spending but spend. Spend what is left after saving being able to make all of these pre tax and after tax investments is a result of smart money habits. Over the past decade we also bought less home than we could afford. Oh, nothing on our cars and refinanced our home and rental mortgages several times to lower monthly payments most importantly when my income grows, our lifestyle stays the same. This enables us to use salary increases and business income to invest in our future and increase our income even more. Is Retirement savings enough? But as you know, money invested in retirement accounts is meant to grow untouched until at least age fifty nine and a half to avoid penalties and allow for compounding growth retirement. Investing doesn't really provide a secondary income stream. The money grows tax deferred until it can be easily accessed distributions and must stay in the tax advantaged accounts before then this is where after tax investments come into play, still contribute to tax advantaged accounts I then at the end of each month, aimed to have excess cash flow available. Available to invest by creating a budget and sticking to it use excess cash flow to create additional income streams explore side business ideas. Can you invest one hundred dollars in a business idea and return a profit and scale into something worthwhile by individual stocks are index funds. Keep investing in stocks after your tax. Advantaged accounts are maxed out. Save up to buy rental property or start small with real estate. crowdfunding real estate investing is one of the best uses of your money for income, growth and tax efficiency. I'm okay if you don't completely Max out your tax, advantaged accounts end squeezed some after tax money out of your budget to invest I'd rather you invest excess cash flow than spend it? Reality Sets in income earned from secondary sources is taxed, but real estate, long-term investment income, and even business income now or more tax efficient than salaried income. Avoid the tax man when you can, but don't let him scare you from the pursuit of prosperity. Conclusion. The quote at the beginning of this post isn't something. Buffet repeats every earnings quarter on squawk box. He uses his influence to comment on the economy and politics talk about great businesses and recommend that most ordinary investors by an S. and P. Five hundred index ETF end. Leave it at that, but my interpretation of his quote is Broader Buffet is an entrepreneur, and he's interacted with great business leaders throughout his career. He's a firm believer in capitalism and the power of investing. Investing investing is not just about buying stocks. Companies Invest in themselves to remain competitive. They invest in their people, and in growth they diversify business lines to manage cyclical risks. It said in personal finance that we should all think of our financial lives as if we are a business, money comes in expenses. Go Out. We invest in education for ourselves and our families, so that we can prosper, and we can diversify our income streams and investments to help deal with the unexpected. You just listened to the post titled Never Depend on a single income by Craig Stevens of retire before Dad, Dot Com. And a real quick thanks to anchor for hosting this podcast anchor is the easiest way to make a podcast. 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