A few years ago I was working for a company that was struggling financially. We all knew things were not going well for the company. It was in the transportation sector and the downturn that part of our economy suffered after 9/11 was just enough to push the weak company over the edge.
I had seen the writing on the wall a few months before the end and talked to my wife about looking for another job before it got to that point. We decided to stick it out. We had our reasons.
In the end we all lost our jobs. I was the operations manager so I was literally the last one out the door at 10 PM on that Friday night. The company was to be bought out by a competitor so we were told to come back on Monday and there’d just be a different name sign out front. However I got a call first thing Saturday morning from my boss telling me that negotiations had fallen apart during the night and Monday we’d all be cleaning out our desks.
He later told me that day of making calls was the worst day of his life. I believe it.
All of us who worked there walked out with nothing. We had folks who’d worked for the company 30+ years. Their pensions disappeared over night. It was very bad.
Fortunately for my wife and I we already knew the number one reason the wealthy continue to build their wealth while the rest of the vast masses of mediocrity just barely scrape by pay check to pay check while their credit card debt slowly grows out of hand.
And what is that one thing the wealthy do differently?
Multiple Streams of Income
The wealthy develop multiple streams of income. They don’t rely on any one source of income to meet their needs. They have different businesses, investments, tax shelters, savings programs, all of which provide a portion of the money they have coming in every month.
That one principle is completely different that what most of us were taught about money when we were growing up. Conventional wisdom says that we need to get a good education with as many paper credentials and degrees as we can so that we can be qualified for the best jobs. And that, we’re told, is how we are to become rich and successful.
Yet the conventional wisdom fails us here. Folks who only have one income source live in danger of something happening to interrupt that income. Then they are left scrambling.
And the rich already know it. They’ve rejected conventional wisdom in favor of multiple income streams.
And I’ve experienced the benefits of this concept first hand.
Principle in Action
When the company I worked for folded and I was left out in the cold, we made it through in large part because we had other avenues of income already coming into our budget. When I did our taxes at the end of that year we managed to survive a 65% income reduction without incurring any additional debt. How did we do it?
First we took steps to adjust out budget. Fortunately our cars were both already paid for. We reduced what adjustable expenses we could, like cutting off the cable TV.
But there was a portion of our budget which we couldn’t easily adjust. For example our mortgage payment was there every month and there was no easy way to reduce it. The good news in our case was that one of our income streams was an MLM sideline my wife had that brought in enough to cover our mortgage.
Now a lot of people knock MLM and I understand why. A lot of the techniques that are taught to the MLM sales forces out there are designed to turn the typical MLMer into an obnoxious jerk. My wife chose not to go down that path with her business.
Some would say her choice to not become a jerk, (*ahem*) I mean, to not apply some of the more aggressive techniques that are taught out there, may have limited her success. I can see their point.
It is true she’s not earning millions from her business. But having a source of income already in place that covered our mortgage when my job disappeared seemed pretty successful to me at the time.
The bottom line is there are no guarantees in this world when in the area of income. No source is absolutely reliable. Long gone is the era when the average employee can expect to work for the same company for 30+ years and have a good pension to live on when they retire. Even if you do manage to stay with a company that long, the odds are you may end up like my former coworkers, left with not so much as a thank you for all your service.
The truly wealthy don’t struggle with that because they have their income spread out over numerous sources. If one tanks or disappears they can still lean on the others.
Multiple streams of income is the number one reason the rich keep getting richer.