Broadening your Income-Various Income Streams

One of the ways one can have more income is to broaden your income streams by earning money from more than one source. One could start off with one source of income but then invest/diversify your earnings and begin to earn income from multiple sources. The need to have more than one source of income can not be over-emphasised, especially in this COVID-19 era with the consequences of economic recession, job losses and reduction in salaries.

Some of the sources of income available to a person include the following:

1.Earned Income: This refers to income you earn from a job you do. Employees get earned income.

2.Profit Income: This is income derived from buying and selling. When you buy an item at price A and sell at a higher price B, you earn a spread which is known as profit. Most businessmen & women live on profit.

3.Interest Income: Interest is an earning derived from lending operations, if you lend money, what you earn on the money lent is interest income. Banks and Finance houses have this as one of their key sources of income. Also, an individual can earn this either from his saving account or on a fixed deposit investment.

4.Rental Income: This refers to income earned from letting out a property. This is usually an annual income in a lot of instances.

5.Dividend Income: Dividend refers to a distribution of profits by a company to its shareholders. Essentially what happens is that a proportion of the profit earned is paid out to the owners of the company in proportion to their shareholding.

6.Royalty Income: This is a legally -binding payment that is made to an individual for the use of his or her created assets such as franchises, copyrighted works, patents.

7.Capital Gains: This refers to income obtained from assets increasing in value. For example, buying a plot of land for N5m and in 2 years it has appreciated to N9m, the difference is a capital gain.

A key advantage of having more than one income stream is that if there is a challenge with one source at least you have other sources to fall back on.