Income stream

Income stream
See also

Income stream is a source of income for an individual or an organization. An example of an income stream may be a business or an investment. Creating more than one income stream is something many people practice to earn more money and scale their income.

One way to gain financial independence is to become "less dependent on a specific income stream". One of the most popular ways to develop a secondary income stream is by investing. However, many don't have and follow an achievable investment plan and therefore fail (Create A Secondary Income Stream 2012, s. 3).

Examples of different income streams:

  • Contract job;
  • Investing;
  • Pension;
  • Side business (ex. Affiliate marketing);
  • Book publishing.

Passive income stream vs. active income stream

A day job can be considered an active income stream. Passive income can be characterized by: "ease of scalability", having some tax advantages, and the nature of the income, which is passive. Passive income only requires an investment of some amount of work at the beginning (for example witting a book) and has the potential to generate steady income after this period (7 Predictable Ways... 2018, s. 1).

Examples of passive income streams:

  • Affiliate marketing;
  • Kindle publishing;
  • YouTube videos;
  • Service arbitrage business;
  • Membership sites (7 Predictable Ways... 2018).

Income streams generate economic wellbeing

According to research conducted by Luxembourg Income Study, people living together and combining their income streams can live more cheeply than people living individually. So there are economic advantages coming from living together in one household. "These are reffered to as household economies of scale and are measured (in this research) through a technique known as an equivalence scale (Ageing and Income... 2001, s.30-31).

Tendency to having multiple income streams

Nowadays people tend to having more than one income stream. It is slowly but surely becoming a norm in many households. There are various reasons why people decide to activate more than one income stream, one of the reasons being that it is harder than ever to survive having only one source of income. Due to inflation and rising costs of living people are diversifying their income streams (Enriching All Women 2017, s. 3).

Additional income stream is not usually the main job but rather some additional activity that a person performs during weekends or in a spare time to generate some additional income on the side while also working in the main job that pays the bills. Having only one income stream would be ideal situation but many individuals and businesses do not have a stable, high-paying or good enough main income stream, therefore they have to look for secondary sources of income (Enriching All Women 2017, s. 3).

Many people diversify their income streams because their worry about their future or current financial situation. On the other hand, there are also others that find their passion and turn it into an income stream. Both may stay reassured that loosing their "primary source of income" will not leave them without a source of income as they can still support themselves gaining money from a different income stream (Enriching All Women 2017, s. 15).

How to generate secondary income streams

In order to generate any source of income an individual needs a set of skills. The same applies when looking for a secondary income stream. There are two main ways to generating secondary income stream:

  1. Getting trained in a specific field;
  2. Learning useful skills on the job and becoming experienced (Enriching All Women 2017, s. 73).


Author: Justyna Szczepaniec