How the Wealthy Diversify Their Income Streams

December 19, 2015

2:00 pm

One common trend that most wealthy people all have in common is that they collect more than one check a month. In fact, there are very few multimillionaires who have only one source of income; most of them have three or more. When you have developed yourself as a professional and your skill set as providing value to those around, there emerge opportunities to leverage that skill set to bring in additional profits.

Diversifying your income streams is critical not only for personal wealth, but also for protecting yourself and your loved ones against unpredictable industry-based sways in the market. In fact, relying on one source of revenue is a financial risk to take in the circumstance where your current endeavor doesn’t work out. If you are interested in securing your financial situation, or having additional spending power, consider finding an additional source of income.

There are many options and types to choose from. Your new revenue streams can be passive, active, or a mix. By choosing it yourself, you can find a source of income that you are passionate in. While wealthy people are not always known for their side-sources of income, this is a major part of how they became so wealthy. From NBA players who make a majority of their income from advertisements, to politicians who make most of their money from book sales, additional revenue streams are key for those who want to become wealthy. Here a several ways to diversify your income streams.

Become Financially secure

To become wealthy, you need to be risk averse and avoid costly mistakes. Before you can look into other supplemental ways to make extra cash, you need to make sure that you have a consistent flow of money. Don’t worry about spending energy and time on fun side-projects until your primary source of income is secure.

Define Your Value Proposition

Everyone has unique traits skills. Discover the intersection of where your passion meets your skills and hone in on it. If you can be compensated for doing something you love to do – that is ultimately the goal. If you can find something that you are good at which benefits other people in some way, then you are on your way to finding an additional source of income. Understand your worth like you would understand a stock: know what values you possess and how to leverage those abilities to produce a marketable skill. Present yourself in such a way that people will want to buy you. If you know how to play piano, market yourself as an expert pianist. In doing so, people who want to learn how to play the instrument will come to you.

Find the Opportunity

Before you bring your skills to the market, you have to know what that market is. This is key to diversifying your income sources. Determine who can benefit and who has a desire for the service or function you are performing. What problems can you solve? What processes can you expedite? Your skill is useless without an appropriate audience who wants to digest it. Without buyers, there is nothing to sell. Wealthy people often have funds available to play in markets where there is a greater risk, such as penny stocks or binary options. They more money you have, the more options you have for new opportunities of income.

Build Your Brand

Market yourself. Build yourself up as an expert. The old saying is “fake it ‘till you make it.” Tell people that you are an expert until they believe you. Along with a brand – build a community of people who follow and respect you. Grow an audience around you; don’t wait for them to come to you. If you sit back and hope that your talent will be recognized – it wont be. You need to go out there and take the success you want.

Learn About Problems

Learn what people want and need. In order to customize and optimize your services and be able to maximize profit lines, it is imperative that your service is as helpful and effective as possible. Listen closely so that you understand exactly what people want.

Create a Service That Matches Your Audience

Once you have found out what they want, give it to them. Take the time and energy to make your service perfect, now that you understand fully what it should entail. Over deliver on performance. This might hurt you in the short term – it could cost additional resources, time, and money, but in the long term it will help build your credibility.

Learn from Others

Talk to experts. Talk to millionaires who have multiple sources of revenue and ask how they did it. There is no need to reinvent the wheel. Be humble and willing to seek help from other, more experienced people.

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Jake is an Account Executive at HubSpot. He's formerly the VP of Business Development at Alumnify. In addition to Tech.Co, Jake has contributed to Inc., The Huffington Post, and Elite Daily.