money

How Diverse Streams of Work Can Help You Keep Your Cash Flowing

November 8, 2011 by admin

Here is a different approach to financial security that you might not have thought of:

Imagine a full time job is like a large flowing river of income. With this one source, you have all of the financial flow that you could possibly need, and your expenses are covered in comfort. However, what about when something happens and the river ceases to flow? Your industry could experience a drought, or you could lose your job, causing the flow of that river of income to be dammed up forever.

Since you only relied on one source of income, now that it has dried up you are completely up the creek without a paddle. To start another river of that magnitude flowing will take time, and every day that no money flows in you are digging yourself deeper into debt.Living on a one-source income is great while the money is flowing, but it can be risky business because you never know what is coming around the river bend.

Establish Diverse Streams of Income

So how can you avoid the risk of relying completely on one income source? The solution is to restructure the way you make money, and divide your earning power into several diverse streams of income rather than just one. This could mean going freelance in your industry, working on several side projects, publishing something that generates royalties, or working two part time jobs rather than just one. Just like stock experts advise you to diversify your portfolio, diversifying your career is just as advantageous.

Let’s take the example of the freelancer. Although it might seem that their income is much less stable, because they are not in a conventional job, however their diversity is what keeps them afloat. Imagine that a freelancer is simultaneously working on 10 different small projects for 10 clients. If one of those 10 clients suddenly decides to pull the plug and let the freelancer go, they don`t panic. They will not even have to suffer financially because they still have 90% of their income to rely on while they search for a new client. A loss of income is only crippling if you only have one source to cover all of your needs.

When we bring it back to the river analogy, this strategy is like having several small streams, tributaries, creeks and brooks all flowing into one river. The volume of water is the same, but if one stream suddenly dries up the river will not stop flowing. The bonus advantage to this style of working is that you will be constantly invigorated by the diversity of your work, and you will be much less likely to become bored because you are engaged in such a variety of exciting projects.

Think about it, how can the concept of diverse streams of income help you? What have you done to create stability in your income?

Five Things to Do With a Windfall Other Than Spend It Right Away!

November 2, 2011 by admin

Perhaps you have won the lottery, received an inheritance, or cashed in one of your investments, and now you have a large sum of money you don’t know what to do with. Although it is tempting to cruise around town in a brand new sports car it is important to think carefully about how to spend your newfound cash.

To give you some ideas on the smartest way to use your new wealth, here are five things to do with a windfall other than spend it right away:

1. Erase Your Debt

Your newfound money will allow you to clear up all of your debts, which will lift a huge financial burden off your back and give you a lot of freedom. Start with the debts with the highest interest first, such as your credit card debts.

2. Create an Emergency Fund

Calculate how much money you would need to cover your living expenses for 6 months. Take this amount off your windfall and place it into a savings account. This money will be your failsafe. In case of an emergency, such as you hurt yourself, become ill, or lose your job, you will have enough money to live comfortably until times get better, without having to go into debt.

3. Invest in Your Home

If you spend your windfall on a renovation for your home, there is a good chance that you can increase your property value enough to make it more than worth it. Talk to estate agents in your area to determine which type of home improvement will increase your home’s value the most, but usually kitchens and bathrooms are the best rooms to update.

4. Buy a Vacation Property

Consider putting your newfound wealth into a holiday home overseas in a popular destination. You will be able to enjoy lounging on the beach there, and when you are not using it you can rent out the home to tourists to cover the costs. Later on in life when you want to retire, you will always have the option of moving there!

5. Live Off the Interest

If you won a million dollars in the lottery, you could spend it right away on a huge house and a car and then have nothing left. Or, you place it in an investment account and have it earn 6% annually. At this rate you would have approximately $5,000 per month or $60,000 per year without ever touching your initial sum. You could easily live off this amount and never have to work again.

These are a few ideas of what you could do with your money if you are lucky enough to receive an unexpected windfall.

Do you have any other ideas of how you could use your windfall?