How Many Income Streams Do You Have? (and how many should you have)

How Many Income Streams Do You Have? (and how many should you have)

In Summary

Passive income streams can provide a boost to your savings, investing goals, and an unexpected job loss. Who wouldn’t want to earn money without having to clock in for an eight-hour workday?  

The good news is that there are many options to start building out a passive income stream beyond what I’ve already outlined above. Most will require upfront time and energy devoted to building them out before you start to see returns. 

Explore these ideas, and you could be well on your way to make money while you sleep in no time.

This story has been edited and revised. Its original version contained portions that did not meet our editorial standards.

Which passive income source is best?

The question of which passive income source is best depends on several factors, but some of the most important include the amount of money you have to invest, the total opportunity size, your interest and ability in the area, the amount of time you need to invest and the potential to succeed. Typically, the lower the barriers to entry, the more crowded the field of competitors and the lower likelihood of success.

So you’ll need to weigh the opportunity against these factors and see which passive income strategy works best for you. But it can be helpful to have natural ability and an interest in your target area, because these can help motivate you in the early days when things are likely to be tougher.

There are passive income opportunities for people who are starting out with some money and even those who have no money to start.

How can I make passive income with no money?

If you have little or no money to start, you’ll have to rely mostly on your own time investment to power you through, at least until you build up a little money. That means focusing on passive income sources that take advantage of the following traits:

  • An area where you’re an expert. Here you can build your expertise out into a useful product or service for consumers, e.g. design, software coding and others.
  • An upfront work-heavy opportunity. You’ll need an opportunity that requires a time or work investment, such as creating a course, building out an influencer profile or other options.

In effect, you’re substituting your time for your lack of capital, until you can get enough capital to expand your set of opportunities.

How can I make passive income with money?

Money can provide you with more passive investment opportunities. If you have money to invest in a passive opportunity, you have not only the opportunity set above but a new range, too. Money is a prerequisite for taking advantage of the following passive income areas:

  • Investing in dividend stocks or REITs. Investing in stocks means you need money upfront, but you’ll receive some of the most passive forms of income around.
  • Save with bonds or CDs. Other purely passive activities include buying bonds or CDs.

Here you can use your money to make money with little or no effort on your part, if that’s what you’d like to do. Of course, you could pair your money with a lot of time investment to move into an even more lucrative niche, too.


Rental Income

Property investment is an excellent way of protecting your money and generating an income from rent. There are two downsides to this income stream. First, it requires a substantial investment initially, unless it is part of an investment scheme. Second, releasing the cash can be time-consuming and costly, so if you may need the money quickly, this is not for you.

Online Business/Hobby Business

The final most common stream of income is creating a side business.  This business could be online or offline, and I call it a “hobby business” because it usually takes a form that relates to the owners hobby.

For example, if you are tech savvy or enjoy working online, you may sell of eBay, or create a website (like I did), or promote your services through a site like Fiverr.

If you work offline, you could do Partylite Candles, make-up like Avon, or various clothing and jewelry lines.

Don’t know where to start?

Here’s a list of 50+ Side Businesses You Could Start Today. Or, how about a list of 30 Different Passive Income Streams you can build.

My 7 streams of income (updated 2021)

Now that I’ve explained how I view building streams of income and my personal story, I’ll share with you my 7+.

Private Businesses

I run several online businesses now (all it takes to start one is a domain, hosting, and maybe incorporation). There are two notable ones. The first is a meal plan membership site called $5 Meal Plan that I co-founded with Erin Chase of $5 Dinners. The second is the umbrella of blogs I run, including this one and Scotch Addict. They pay me ordinary income as well as qualified distributions since I’m a partner.

Stock Market

The bulk of my investment assets are in what we consider the “stock market,” mostly in a variety of Vanguard Index funds. I am paid interest, ordinary and qualified dividends, and will eventually be sold for capital gains. I also have some private placements that are debt and equity instruments which so far just result in interest.

To give you a sense of scale, 80% of our investable assets are in the stock market.

How do you accumulate wealth?

Here’s the next key to the puzzle.

The key to accumulating wealth is uncomplicated:

  1. Sell your time for money,
  2. Spend less than you earn,
  3. Invest your savings so it will grow without your active intervention.

That’s it. It’s a simple input and output problem. And it’s also what separates the rich and the wealthy.

There is just one constraint on the whole system — your time in this world.

You have just 2.21 billion heartbeats. At 60 beats per minute, that’s a little over 70 years. Each beat matters.

There’s another constraint, and here is where wealth inequality rears some of its ugly head, and it’s known as Maslow’s Hierarchy of Needs.

You need to eat. You need a place to sleep. And both of those, and other needs, require money.

So in an ideal world, you could take your time to build a massively successful business (or maybe a few failures before the massive success), but in the real world, you need a job that will pay you now so you can feed yourself, clothe yourself, and secure a place to sleep.

I call it financial gravity.

If you want to really start tracking your finances, and I mean not just your spending but your investing (that’s where wealth is built), give Personal Capital a look. It’s a cornerstone of my financial system and I think you owe yourself a look. 100% free too.

6: My Website (You are here!)

Right now my website is still in its neophyte stages. I’m still working on growing my traffic so that I make more money off of ads, but it’s gotten to the point where it pays for its own hosting, and I’m seeing gains on clicks and pageviews. The goal here is to get to where I can qualify for better, more lucrative ads. 

Some people make thousands of dollars a month off their websites and I’d love to be in that class one day by providing valuable and free content to you!

Active vs. Passive Income

Before moving on, I’m going to take a quick second to explain the difference between active and passive income.

Active income is when you are, trading your time for money. For example, if I don’t have a client and article to write then I’m not getting paid. I get paid for the work I do and how much I earn depends on how much work I do.

Passive income, on the other hand, doesn’t require direct action and isn’t limited based on how much you work. An easy example would be interest earned on an investment or savings account. You didn’t have to do anything, but you still earned money.

Keep in mind that there aren’t many income streams that are truly passive, most require at least a little bit of action up front. But with the best passive income stream the amount of work doesn’t correlate to how much you can earn.

For example, you could create a digital product, and a sales funnel that helps your product to sell on autopilot. It’s now earning money with minimal action required of you. However, you had to put in the work (actively) to create the product and sales funnel.

Other common income streams include real estate investments. This is where you buy a house and then rent it out. You’re not only have an appreciating asset, but rental income to boot. Many will then use their profit to invest in other rental properties to continue to build that source of income.

Earned Income

Earned income is your primary income stream throug

Earned income is your primary income stream through a job. The majority of us start here, and many go no further. For most, earned income is very limiting and has attracted the acronym, Just Over Broke!

In other words, you earn just enough to survive. Of course, some jobs pay exceptionally well, but these are exceptions, not the norm. To go beyond a job and start your own business requires taking risks and moving into profit income.

How I Created Multiple Streams of Income

My foray into multi-level marketing was embarrassing but also valuable in terms of life lessons I learned. I became a financial advisor shortly after that, mostly because I felt the career met my main criteria for helping people and creating an impact. However, it wasn’t always easy.

#1: Becoming a Financial Advisor

During my first year as a financial advisor, I got a small base salary. After that, it was up to me to figure out how to find and retain new clients. Fortunately, I quickly learned how to market myself, meet new people, and set myself up for success. And over time, I made the connections I needed to grow my base of clients, earn a real income, and produce the type of results my clients wanted.

Anyone who is self-employed knows how hard it is to get out there and “eat what you kill. “I did have a big firm backing me so that definitely helped, but it was still up to me to go out and find new clients.

And really, this is why financial advisors have one of the largest failure rates of any profession. Meeting people and acquiring new clients is hard – especially when you’re first starting out.

#2: My Life Insurance Website

In addition to my financial practice and this website, I’ve cultivated other income streams over the years. One example is where, until recently, I earned a side income while helping people choose the right insurance for their needs.

A lot of people don’t even know about my life insurance business, but it’s a huge part of my success. Like my other big projects, however, I started it to help people. Over the years, I’ve seen so many people who are uninsured or underinsured. For whatever reason, they don’t understand the importance of life insurance. Worse, they don’t understand how affordable it is for the average family.

A lot of people also dramatically underestimate their needs. They think a $250,000 term policy is enough to cover their family. Heck, some people think $50,000 is enough when really, they should have a whole lot more because they have a high income or a lot of debt.

Unfortunately, it can be financially devastating when a spouse – and especially a primary breadwinner – loses their life while their family is still young. was created to help people realize just how much coverage they need, then to steer them toward companies that offer quality life insurance policies for a price they can afford.

#3: Investing

When it comes to earning extra income, let’s not forget about the most obvious income stream I have – investing. While everyone who invests for extra income does it differently, most people rely on mutual funds, ETFs, or dividend investing.

As for me, I love investing in lending marketplaces like Lending Club and Prosper. Each of these provides side income in the form of dividends, interest, and even capital gains paid out at the end of the year.

While investing for side income can work out well, most of my personal investments are tied up in our retirement accounts.

For starters, I have a 401(k) through my business. I also have a Roth IRA, although I can’t add to it anymore due to income requirements. I also have taxable investment accounts, but I would much rather invest via our retirement accounts to avoid paying extra income taxes whenever possible.

#4: Media Deals

My sixth income stream is one I just added two years ago – scoring awesome media deals. This is something I never really imagined happening years ago, but works out rather well today.

And really, media deals are a great fit. I already love doing YouTube videos and interviews and putting myself out there. With media deals, I can use my video skills and personality to represent big financial brands and help them market their products.

As long as it’s something I believe in and support, it’s a win-win. Companies I’ve been approached by in the last two years include John Hancock, Credit Karma, Discover, Capital One, MasterCard, and GM, just to name a few. It’s been so fun helping these awesome companies create their own marketing plans, whether through video or other online media.

Last year was my best year ever in terms of media deals, but it looks like I have a few locked up for 2017 already. Considering one of them might pay me more than I earned last year, I’m stoked!

But the important thing to remember here is that it all started with this blog. I didn’t really know what I was doing when I started, but I kept plugging away.

Over time, all the YouTube videos I made taught me how to present myself better on screen. I didn’t know how it would pay off at the time, but I’m so glad I followed my instincts and kept going anyway.

#5: Creating a Course

Last year, I also launched an online course for financial advisors – The Online Advisor Growth Formula. Last year alone, this resource brought in more than $100,000 in revenue. I’m especially proud of this accomplishment because it took me a few years to build up the courage to get started.

Fortunately, a good friend helped me hone in on the idea for my course a few years ago. I wasn’t sure what I should create a course on, but he reminded me that a ton of financial advisors struggle to market themselves online. Right away, I knew it was true.

Why? Because so many financial advisors have talked to me over the years and many have asked if they could pay me for consulting. Why not create a course they could buy instead?

So, that’s exactly what I did. I created video tutorials showing advisors how to market their businesses online, then formatted them into a single course financial advisors could purchase. And guess what; it worked!

The bottom line is, it’s smart to have multiple income streams no matter who you are. Why? Because the more ways you can earn money without compromising your integrity, the better off you’ll be. And if you’re self-employed, having multiple income streams is almost essential. Not only will you enjoy a higher income, but you won’t go broke if one stream ends out of the blue.

If you want to create your own course, you can setup a free account at I’ve used them to create all of my courses and love them!

3: Etsy

I created BudgetGirlGoods, my Etsy shop, after much demand for my personal budget templates. I’ve given away thousands of free rudimentary templates here on my site, but some people want a version with more instructions, fancier colors, etc. I’ve also listed a net worth tracker, inspirational fill-in charts to track savings and debt payoff and more! 

While similar in name, I list this income stream separately from Budget Girl as a whole because it’s a near-totally passive income stream.  

Once I do the work to create the digital product, make the listing and graphics, I’m mostly home free. I do have to respond occasionally to inquiries and provide occasional tech support, but this is largely a hands-off income stream, which is quickly becoming my favorite way to build wealth. 

Shop here!
Shop here!

My two streams of income are helping me build a third

Right now, I have two unique sources of income that can cover my living expenses:

  1. My day job.
  2. My side hustle.

The real beauty of having these two income streams is that they are helping me build a third stream of income; passive income from investments.

Generating enough passive income to cover your living expenses is hard and takes most people their entire lives. The only way to shorten the amount of time it takes to build that much passive income is by maximizing your savings rate, the percentage of your take-home pay that you save and invest.

That’s where having two streams of income is powerful because, by definition, it means you’ll be able to achieve a minimum savings rate of 50%. If one or more of your income streams is enough to more than cover your living expenses, you can accelerate your savings rate. That’s how I am saving 83% of my income.

By keeping my living expenses constant and constantly looking for ways to increase my current income streams, I’ve been able to invest a decent amount of money relative to my living expenses.

That last point is the key to generating enough passive income to cover your living expenses.

It’s not how much money you have invested that counts, it’s how much you have invested relative to your living expenses.

  • $1 million could last a lifetime if you only need $30,000 per year.
  • $1 million can evaporate pretty quickly if you need $300,000 per year.

So, right now, I am taking all of my surplus money from my day job and side hustle and investing it. Once I have reached the point where my passive investment income can reliably cover my living expenses, I plan on dropping one of my current income streams.

How to Evaluate Your Income Streams

It’s important to first evaluate your income stream options before financially committing to any one of them.

Here’s a list of factors that I would use to assess each potential income stream before moving forward:

How much time self-made millionaires devote to new income streams

If you have a consuming 9-to-5 job and/or other sorts of commitments at home and at work, carving out the time to devote to starting another income stream might seem daunting. Based on what I've learned from my research, you can start small:Set aside no more than five hours each week and begin slowly building something new. 

If you're not sure where to start, think about the subjects, skills, and activities you are most passionate about, and explore the ways that you could monetize one of those

In my research, other than consistent saving and investing, passion was by far one of the most important shared attributes of the self-made millionaires in my study. 

VIDEO 2:45 02:45 Barbara Corcoran: How your hobby can become a side hustleEarning

Video by Stephen Parkhurst

Secondary Salary/Spouse’s Salary

No matter what venture you undertake in life, you need a team.  I’m a firm believer in team work, even if it is just to bounce ideas off of, or to have someone tell you that you are off track.  For many individuals, this person is their spouse, who also brings some income diversity to the table.  Just like I mentioned above, if your spouse has income, try to maximize it.

I would throw in some caution here: if your spouse works at the same company, or in the same industry as you, you are not diversified, and should something happen, you could be in a world of hurt.  Companies do go out of business, companies do lay employees off.  There is nothing wrong with working together, but realize that you are not diversified and you should be trying to maximize other income streams as a result.

What Are The 7 Streams of Income?

1. Earned Income

Otherwise known as your salary or typical monthly income from your primary job. Earned income could be based on an hourly rate alongside bonuses, commissions and more. This remains the same whether you are employed or self-employed. This earned income is typically subject to taxes, although likely at different thresholds depending on the amount. 

2. Business Income

Alongside earned income, you may receive extra income from businesses you have set up. These are otherwise known as your side hustles, and may be made up from just one source or could be multiple.

It is typically found among your balance sheets, taking the difference between profit and loss. Once again, this is subject to taxes. 

3. Interest Income

You’ll receive interest on your bank account savings, although since 2020 this interest rate has likely fallen significantly. Ideally, it would match the level of inflation but these days, interest rates are very low.

Find out your interest rate by checking your bank statements. If you have funded any loans, you are also likely to be eligible for interest as the principal amount is repaid. 

Some banks with interest rates include CIT Bank, Aspiration, and Consumers Credit Union.

4. Dividend Income

The stocks and shares you invest in may yield dividends, or you be paid via dividend if it fits with your company structure. Dividends are more commonly known as a share of the profits.

For example, as the Director of an LLC, you are eligible to split your profits into twelve monthly dividend payments. Alternatively, some investments pay dividends quarterly or annually. 

5. Rental Income

Once you own property, you can begin collecting rental income as an added monthly income stream. Depending on the structure of your property (whether you’ve got it under a separate company, for example), you may be subject to extra taxes, so the yield of your property income should account for this.

As a landlord, you’ll likely have a Mortgage to pay as you acquire new properties. This should also factor into your rental income pot. 

6. Capital Gains

Capital Gains income is acquired through the sale of assets such as art, stocks, business, and loans. Income earned via this route is subject to capital gains tax but will often be acquired as a lump sum rather than consistently over time. Learn more about capital gains tax on the IRS website.

7. Royalties or Licensing Income

Are you a creative individual who produces music or photography content? Licensing this for specified public usage means you can create royalties as an extra stream of income.

Royalties are not likely to be significant on their own, but mass production/usage of your content is likely to bring in a steady stream. 

Bottom Line

The more income streams you have, the more secure your finances are and thus the more secure your lifestyle. However, having multiple income streams doesn’t happen overnight, you have to build them one at a time, even if they will eventually lead to passive income.

Related: The Rich Don’t Have One Income Stream

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