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If you were to lose your job today, what you still have enough money coming in to cover all of your expenses?  For most people, the answer to this question is no.  They rely on solely their job to support them financially.  Their financial situation is at the complete mercy of their boss.  Two simple words - You're fired - and they are ruined financially.

The problem here is only having a single income stream.  Due to circumstances beyond your control, that one income stream can run dry.  What is the solution? Develop multiple income streams so that if one or two were to fail, you would still be receiving enough income to cover all of your expenses.

Now, this isn't to say that you should be out there working multiple jobs. That is neither realistic nor desirable. Instead, focus on creating additional income streams, preferably passive.  By passive income, I mean a structure that once is setup, requires minimum upkeep to maintain the income stream.  In the past, setting up passive income streams was difficult but due to the way the world is today because of technology, additional income streams can be added easily.

Passive Income With the Internet

By leveraging technology, you can create a passive income stream with the internet.  Today, it is very easy to setup a website. Once a website is setup, there exists several ways to monetize the traffic that is coming to the site:

• Direct Sales - This is the most common way to make money on the internet. You sell your own product directly to the consumer and keep the profits. The product can be a physical product or a digital information product. By leveraging existing delivery mechanisms and using outsourcing, the entire sales process can be automated after the initial setup. Hence, this income stream can be made completely passive.
• Affiliate Marketing - If you don`t have your own product to sell and don`t want to create your own, you can sell the products others have created and receive commission in return. This is the basis of affiliate marketing. By using cookies, companies can track where a web visitor comes from and pay commission to the appropriate person. Again, this is something that can be made passive.
• Advertising - I use Google Adsense on this blog and receive money every time someone clicks on an ad. By providing content that drives traffic to this site and receiving money from advertising, I have created an additional income stream. Now, this income stream is not completely passive since I have to consistently write new articles to grow traffic levels. However, writing articles is something I enjoy and it also provides a good supplementary income.

A word of warning for those interested in getting involved with internet marketing.  There are a lot of crappy products out there that promise you will make a million dollars in a month etc.  Don`t be duped - I would only purchase products that have received several positive reviews and offer money back guarantees.  There a lot of people out there just trying to make a quick buck by selling useless info products.

Leveraging Your Cash

As you continue to save a percentage of your income (something that will be covered in the next installment), you can use that cash to create additional income streams for yourself by making your money work for you.

For example, let`s say you are interested in purchasing a new home.  If you are older or have been wise with your money, instead of selling your current home to purchase a new one, you can keep the one that you own now.  You can then purchase a new home while renting out your old home.  The rent you receive from your old home may be used to pay the mortgage of your new home.  In this way, you are using a fairly passive income stream (rent) to build your net worth (equity in your new house).

Additionally, you can put your money to work by investing it.  This is something beyond the scope of this series but I suggest you spend time getting educated in investing in stocks.  You can educate yourself to the point where you can make your own investments or you can use a managed account where your investments are made by a professional.  Properly utilized, investing in stocks can make your money work for you and provide additional income.

Advice for Small Business Owners

For those individuals who own a service-based business, you can easily create a secondary income stream by making an information product.  This entails taking your existing knowledge and packaging it in a book, audio program or DVD program that you can sell in addition to your service.  The advantage of products is they require a fixed time investment at the beginning to create, but after that you can receive income on each sale with minimum additional effort.  By using outsourcing, you can also make the creation of the product far easier.  Unlike your service, where you trade your time for money, a product will bring you income independently of your time investment.

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I covered a few simple ways to add additional income streams that while recovering a significant upfront investment, can yield passive income over the long term.  There are many more passive income streams available to you if you simply do some research.  Ultimately, the real advantage of multiple income streams is the sense of financial security they provide with the knowledge that the loss of one income stream does not destroy your entire financial situation.

This post is part of a series on mastering money & wealth:

1. Intro
2. Raising Your Financial Awareness
3. Commitment and Focus
4. Wealth Mindsets
5. Clean Up Your Limiting Beliefs About Money
6. Generate a Higher Income By Creating More Value
7. 25 Ways to Create More Value
8. Create Multiple Streams of Income
9. The Key to Financial Freedom
10. Money Management