The Concept of Income

Sources of Your Stream of Income

The purpose of this article is to build a better understanding of the concept of income, to examine the idea of income as separate from having a job and learn how having multiple sources of income can provide a stream of money into your life that is much larger.

Importance of a Concept of Money

It is our personal relationship to money and to the things around us that shape our decisions and determine our future in so many ways. Every day I become more aware of the fact that while there is much to understand about money, there is even more that we need to understand about ourselves and the way we think about money! That is especially true when we start thinking about our income.

It is extremely vital for each of us to understand our personal thinking about our income if we want to improve our financial future because of the way it affects our financial decisions and their outcome.

To help us in this area I want to raise several questions. Spend some time thinking about these questions. Write down your thoughts, and come back to reflect on them from time to time.

In this way you will turn this article into an action step on your part that will produce more than just knowledge. Instead it will develop an internal understanding of income that will help shape your future decisions about money to make them more productive.

The Most Essential Idea About Income

Question #1: Do I really understand how getting in control of spending is more important than earning more money?

It is very hard, perhaps impossible, to earn more than you can spend. It is essential to learn how to get in control of your spending as a first step toward financial success.

Ask yourself where you stand today, and even more important, how much of a commitment you have made to keep spending in check.

If you received an increase of $500.00 a month starting today could you easily set it aside in debt reduction, savings, and investment without even being tempted to increase spending? What are you doing now to stay in control? How can you improve?

The Best Source of Your Income

Question #2: What kind of income approach fits my personality?

Do some research if necessary to see what personal qualities are required to be self-employed, to run your own business. Do some soul searching. Personally, I cannot imagine not being self-employed. I prefer it for many reasons. But I know that not everyone shares my personality traits. Don’t get into something you cannot enjoy.

You can clearly become financially successful as an employee. In fact, and believe it or not it is true, while everyone talks about teachers being under paid more educators become millionaires than business owners!

You can maintain a base of income as an employee and still earn independent income part time, either as a home based business owner or an investor for example. The key is to determine your preferred lifestyle and act accordingly. Do not choose your basic income source based solely on the amount you can earn. You will not be as productive if you cannot enjoy your work.

Think about it. Be honest in your reflection. Choices in this area can have long term consequences. You want to get it right.

Remember that you are not locked in forever as a result of an initial choice. The average person has four careers in several fields of work over a lifetime, some more and some less. You can change and you should when it would make for a better life.

Furthermore, in every field there are jobs with a wide range of pay. Everything one person does for free another does for pay. And the pay for most jobs can vary widely from place to place and employer to employer.

Understand Multiple Streams of Income

Question #3: How can I increase the number of ways in which I generate income both in the short term and in the long term?

Robert Allen helped popularize the idea of looking for several sources of income with his bestseller, Multiple Streams of Income. But Steven R. Covey (The 7 Habits of Highly Effective People), in his review of Allen’s book, revealed one of the most telling points about that approach. He wrote, “The whole idea of Multiple Streams of Income will be a powerful paradigm shift for most people.”

What this means is that it is easy to acknowledge this as an exciting idea but harder to adopt it in practice because of the way we look at work. Separating the idea of total income from your “job” is not easy for most people to do. This whole new perspective, what Covey calls a paradigm, must be internalized mentally before the practice of income diversification can be realized in the real world in which we live.

The key is to think of a job as just one way to get money. Often two or three part time jobs may bring in more money than one full time job. You can make more money as a business owner than you can as an employee. You can make more money from investments than you can from business.

As soon as you separate the idea of income from your job alone and see your job as just one means of generating income you will have a different perspective than most of the people around you. You will then be well on your way to a higher than average income.

How about finding a way to generate an extra thousand a month for the sole purpose of paying off your home loan? Or buying your next car without financing it? The potentials are limitless. But any method must be adopted in the light of a good understanding of your own interests, desires and abilities.

It may help you if each source of income is focused on a specific goal. Obviously, some investment income needs to be directed toward retirement savings. But think about other uses as well.

A Concept of Income Multiplication

It is vital to find more than one source of income, that is to set about building multiple streams of income for yourself. But is also important to do it right. Establishing a worthwhile concept of income is the beginning.