Plenty of us have a day job. On occasion, you chance upon this certain group of people who seem to have it all – time, happiness, money, and fulfilment in what they do. You begin to wonder why you aren’t in a similar position as they are, and how you could achieve the same.


Side note:
No matter what your circumstances are, and despite your circumstances, you have all the opportunities to become a happy and fulfilled person, too. Perhaps you’re not born with a silver spoon, served lunch on a silver platter every day, neither do you drive a fancy car, but that’s okay. Soon, you’ll realise life is more than fancy cars and houses. I’ll probably pen this down in a blog post later, for now, let’s focus on today’s topic on working with what you have, and then some (more).


Passive & Active Income: You Need Both.

When I first started freelancing at the age of 14, I honestly had no idea what personal finance was nor had I the slightest clue about financial planning and the importance of it. This led to a series of pretty stupid choices, from spending too freely and lending money too readily, ultimately destroying my financial stability. Picking myself up again wasn’t all that difficult, but it took some time getting used to.

I began to understand the kind of power time has on each and every one of us, and how it can be used to benefit or harm ourselves now and in the long run.

One of the key things I felt most strongly about was the ability to create both passive and active income streams. Perhaps this urgency is stronger due to my personal experiences and the fact that I’m a woman. Having both flexibility and a comfortable income was something incredibly important to me and thus urgent for me to establish.

Create Multiple Income Streams for Security and Wealth

Imagine losing your day job. Your family might have some emergency savings to cover for the next five to nine months. Now imagine having multiple income streams to give you the means to keep you afloat for an additional year or so, perhaps more. Neither will you nor your family feel the acute stress of having to find ways to unplug that stream of income. It will also provide much more time to clear your mind and figure out the next steps in your career, instead of jumping into just any job that would offer some semblance of an income and stability. You could even enjoy your period of unemployment and focus on building your side businesses.

Having multiple income streams in today’s world is key to financial security, but for many of us, it could well be the first time you’ll have to rely on investments and business income.

Currently, I’m building out two sources of income plus my full time job as a financial planner – an education business and an online health and wellness store. I’m considering adding a few more in the next year, too.

With that, let’s explore some possible passive and active income streams you should start tapping into to grow your income and achieve more.


Side note: As I grappled with my first month in a new career, I also learnt the importance of protecting my ability to earn and my future net worth, two topics I will be sharing in future posts.


Active Income: The Definition

Active income is earned by trading your time for money. As long as you find yourself spending more than an hour or two of your time per week on it, it is considered an active income stream.

Examples:

  • A salaried full-time job, or hourly work
  • A side business or gig, commissioned income (i.e. sales), or side hustle income.

Active Income: The Definition

Active income is earned by trading your time for money. As long as you find yourself spending more than an hour or two of your time per week on it, it is considered an active income stream.

Examples:

  • A salaried full-time job, or hourly work:

    There is tranquility in having a full-time, salaried job. From employer CPF contributions into your CPF account (think free money for your retirement) to a full range of medical benefits and even intangible benefits such as having coworkers to socialise with and an easier access to industry-specific networking, a full-time job always has its upsides.
  • A side business or gig, commissioned income (i.e. sales), or side hustle income:

    A side business earns you income differently than full-time workers in that not only do you pay yourself a salary, but you also get to pocket the profits, which makes it a pretty sweet deal.

    Side hustle income includes money earned from driving Grab or GoJek, freelancing in your area of specialty (e.g social media marketing) via Zomwork, or tutoring students by taking on additional tuition classes via tuition agencies such as A1 Tuition Academy.

Passive Income: The Definition

This is the sweet spot we all hope to achieve. Passive income is earned by investing either an upfront amount of time and/or money into investments, income-generating assets, and business ideas that pay you even if you’re not working.

It should be noted that no income stream is 100% passive. It simply requires significantly less amount of time to monitor and manage depending on their different levels of passivity.

For example, a savings account that pays interest needs very little monitoring, while dividend stocks require a bit more attention. A rental unit may require an hour or two of your time per month, or several hours on some days going through legal or renovation works.

Examples:

  • Dividend income
    Dividend income is turning out to be one of my favorite income streams for the ease of administering and management on day-to-day (or sometimes, month-to-month). Moreover, income from dividends is far more predictable than market fluctuations.
  • Rental income
    As mentioned earlier, rental income is one of the most passive ways to earn a side income stream without having to do very much at all on a day to day basis. However, in order to have rental income, you would need a rather significant upfront capital to purchase properties (single or jointly).

    Side note:
    Most people turn to properties in Malaysia or United Kingdom for the affordability reason. However, don’t forget currency exchange risks and the additional management fees, plus air tickets or travel expenses should you need to visit your property for legal, management, or other purposes, all of which could add up pretty quickly in the long run and requiring much more of your time!

  • Royalties
    Artists, writers, and musicians can earn recurring passive income from royalties paid for the work they have created. This option does require effort upfront in creating these materials (e.g: a book or music album), but the effort pays off in the long run.
    Talent, level of success, recognition, and a sprinkle of luck are needed too, in determining how well this passive income option can be for you.
  • Investment products, investment-linked products, and various savings products from financial services companies
    Many financial products out there are designed to help you earn your income (in the long run) passively. Depending on your age and financial circumstances, there are products out there that would fit your needs and take that headache off your mind.

How many income streams is too much?

My advise would be to start with one and calibrate.

There are some of us who in many cases tend to overwhelm ourselves with too many options and too many side gigs. Take some time to analyze if that income stream is working out for you. Here are some questions to ask yourself:

  1. Am I turning a decent profit?
  2. Is this impacting my mental health in a good or bad way? Can my loved ones benefit or be harmed by this effect on my mental health?
  3. Is my physical health and emotional well-being positively or negatively impacted?
  4. Am I finding both financial and emotional fulfilment with this side income stream (passive or active)?
  5. Am I on the road to burning out, or will I just need to grind this one out for a couple of months and be able to minimize efforts while maintaining the income stream?
  6. How sustainable is this income stream in the long run?

Consider also the security, flexibility, and wealth creation opportunities this income stream would provide for you.

Your family and financial outlook plays a lot into your decision. It would be good to review this with your spouse and a dedicated financial planner to help ascertain your readiness for taking on another income stream and the potential outcomes.


Secret to making it work? Accountability and Persistence.

The key to creating multiple income streams are two things: accountability and persistence. This is not a get rich quick scheme. In fact, most things in life are never a get rich quick scheme.

Getting started with the right mindset and approach is paramount. If you spend too much time ruminating or waiting, you’re losing out on time something you cannot earn back.

At a minimum, explore financial products with a dedicated financial planner and perhaps open a higher interest-bearing savings account, invest $100 in a stock ETF (Exchange Traded Fund), which are perfect for beginners and those who wish to get a head start in building passive income-generating assets.

Recalibrating your mindset and kicking old habits comes next. You’ll need to actively pull your brain away from being the typical consumer. Smarter money habits help you spend less and earn more. Think constantly about creating sustainable wealth, rather than what drinks you’ll be having next Friday night and the available hangover options the morning after.

When you begin to see each dollar and cent as an opportunity, a potential building block of your wealth, you’ll start to notice how you want to hold onto more of them and keep them safe.

“Earn more, spend less, invest the surplus, protect what you have and what you will own in the future.”

Use your primary source of income (for most of us, that’s our full time job) as the main driver while you slowly build supplemental income. Exceed expectations at your day job. Celebrate the bonuses, the raises, the commissions, but don’t spend them mindlessly or piss them away (literally 🍺🍺🍺)

More importantly, focus on one income stream at a time. Build something that is sustainable and works as either passive or secondary active stream, one at a time, instead of taking on too much at one go and burning out in the end.

Lastly, keep on building, creating, reinvesting, sustaining, and protecting what you have.


Want to learn more on how you can get started? Contact me here.

Posted by:Cherie

Financial Planner and Tech Consultant

2 thoughts on “Work with what you have, and then some (more).

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