Multiple Streams of income 1: Linear and Residual Income Streams (The Secret Of Financial Freedom)

We all know what a stream is right? ( A natural body of water flowing into a reservoir). Now I need you to imagine your financial life as a flowing stream, not of water but of money.In this stream there are three parts, which are:

1. The Financial Inlet or Source: This refers to the means by which cash flow into you.
2. The Financial Reservoir: This is where your money is being stored, such as your bank account and pocket
3. The Financial Outlet: Your financial outlets are the various ways through which money leaves you.

In this post, we will focus on the "Financial Inlet" of your Financial stream. How do money flow into you? Do you think you can be financially free with only that stream of income?

The questionnaire below will help you discover if you are on the path to financial freedom or not.

Financial-Freedom And Business Improvement Test

The answer to the following questions will help you to determine whether you are likely to be financially free with your current business. Please answer yes or no to each question to the best of honesty.

1. Do you have multiple streams of income flowing into your life?
2. Do you get paid multiple times for every hour you work?
3. Are your hourly earnings potential unlimited?
4. Do your income streams flow 24 hours a day with without you?
5. Do you own or control these streams of income?
6. Will your income streams continue after you die?
7. Can you give yourself a raise (increase) anytime?
8. If your main income stream dries up, could you survive for a year without working?

Are you done? Lets continue. If your answer to the questions above are all yes then this post is not for you. You can visit other sections of our blog to learn more about developing your business.
But if you answered no to almost every question, then read on. There have to be a change.
Types of Income Streams
Broadly speaking, there are two types of Income Streams. They are:

1. Linear or static (fixed) stream
2. Residual or Recurring (dynamic) stream

Linear or Static (fixed) Streams of Income

The linear streams refers to the money you earn once for the work you did or service you rendered. Those that receive salaries or wages fall into this category.

 To be more specific, these are employee and self-employed persons. As an employee, you cannot be greater than your boss, plus all the insulting and bossy attitude of most bosses. On bn the other hand, as a self-employed individual, it is true that you make your own pay. But it is also true that the more you work, the more you earn, and if you stop working, you also stop earning.

Characteristics of linear income streams.

1. It is fixed, static and restricted.
2. You work for someone called "Boss" and you can never be paid more than your boss is earning.
3. It requires your full presence and as such, there is no time freedom.
4. You only get paid once for your services.
5. If you stop working, you stop earning.

So if the features listed above are what characterize your income stream, then you are at a great risk. This is because, you don't own or manage your financial life and your boss is the one determining your level of greatness (even when you are promoted) and he/she can block that Financial Inlet at any time by terminating your appointment in the name of downsizing. This is a risk you don't want to bear.

Besides, what are your plans for retirement? Or do you want to work forever? Many people work all their life and retire with peanuts which cannot carter for their necessities. I am sure you don't want to go that way.

Even if you own a business, how much time do you have for yourself? How many times do you get paid for a single transaction? Your answer to these questions will determine where you stand. Now lets see the second kind of income streams.

Residual or Recurring (dynamic) stream

The residual income stream is a kind of Financial Inlet that allows you to activate a system once and it keeps on flowing volumes of income into your reservoir for the rest of your life. Isn't that wonderful? With residual income, you are being paid over and over again for the same efforts even when you are no more. Business owners and Investors goes into this category.

For instance, Robert G. Allen wrote a book in 1980 called "Nothing down: how to buy real estate with little or no money down" and in a year time, he was already earning between $25,000 and $50,000 a week! Yet he is still earning multiple six figure value each year from the same efforts.

Also, do you know that the music of Michael Jackson continues to make more money for him even after his death? Yes, they don't have to be there, the money flows without them.

Characteristics of residual income streams

1. You work hard once and it yields a steady flow of recurring income for years if not forever.
2. You continue to earn even when you have stopped working.
3. You are your own boss and there is no limit to what you can earn.
4. There is freedom of time to spend with family and friends.
5. Once started, it does not require your presence for it to continue flowing.

The question now is, what fraction of your income streams is residual? If you are smart as I like you are, then you will start shifting your income streams from linear to residual.

Multiple Streams of Residual Income

Haven learnt about the various types of income streams, I want you to know that to obtain the kind of Financial freedom that we desire, we must have multiple streams of residual income. This will also help to give you the time freedom that you desire. All you need to do is to start now and also create at least one residual stream of income every year. Can we do that? Sure we can. You see, the difference between the rich and the poor is that the rich have multiple streams of residual income into his reservoir while the poor may have just only one stream of income which is usually linear in nature.

Now that you know all these, what kind of person would you love to be? How would you want to manage your income streams? Like Earl Warren said "Ben Franklin may have discovered electricity- but it was the man who invented the Meyer who made the money" .
Start now and your actions will pay off soon.

Want to start already? Visit the links below to ideas on how you can start your first residual income stream.