When it came to money and building wealth, I was lied to as a child.
I have a feeling you were too.
I remember sitting at my dad’s house in Benin City after concluding my NYSC, staring at my laptop with a rough draft of my cv, wondering what career path I was going to start and commit to for the rest of my life.
They had told me that graduating with good honors and getting a job was the fastest path to making money and being comfortable. This was not totally false, but it was not the full truth either. I only discovered this as time goes on.
There is more than one type of income
Getting a job is just one type of income. There are five more types of getting paid.
I want to show you what to focus on so you don’t get trapped in 9 to 5 called salary. Either as an employee or business owner.
I want to show you the six types of income so you can diversify your revenue streams and build a more robust financial foundation.
When King Solomon said, “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”. This was probably what he was talking about…
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Earned Income:
This is the most common type of income and comes from employment. It includes wages, salaries, bonuses, and tips earned from working.
HOW TO GET THIS INCOME: This is the most straightforward. Get a job. Look for part-time or full-time employment in your field of interest.
If your desired job is not forthcoming, Learn a skill and freelance. Or gain experience by working as an intern.
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Profit Income:
This is income generated from buying and selling goods and services. It’s the profit made after subtracting the costs of running a business from the revenue earned.
HOW TO GET THIS INCOME: Start a small business. Buy something. Sell the same thing with a profit margin. This can be online or offline.
You can also sell your services or expertise as a business. We have discussed this before – Productize yourself.
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Interest Income:
This is the money you earn on your savings. It’s the interest paid by banks or other institutions on money you deposit in accounts or lend out.
HOW TO GET THIS INCOME: Stop leaving all your money in your bank account. The interest rate in bank accounts is currently too low.
Open a fixed deposit account. Open a mutual fund account. Let these accounts be your main savings account. Your normal bank account should only be for your daily expenses.
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Dividend Income:
This is the money you earn from owning shares of stock in a company. Dividends are a portion of a company’s profits that are distributed to shareholders.
HOW TO GET THIS INCOME: Invest in stocks that pay dividends. Research companies with a history of paying dividends and consider your risk tolerance. There are apps that give you access to these companies with ease.
Tech companies pay dividends. Nigerian banks pay dividends. Just learn to open your eyes, my friend.
Start with small amounts and gradually build your portfolio.
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Capital Gains Income:
This is the profit you make from selling an asset, such as a stock, investment property, or collectible, for more than you paid for it. Assets are the things that you own that put money in your pocket, whether you work or not.
HOW TO GET THIS INCOME: Understand and pay attention to your sources of profit income, interest income and dividend income. Then this type of income will come easily to you.
This income simply comes from the appreciation of your investments.
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Rental income:
This is the income you earn from renting out a property, such as an apartment, house, or commercial space.
HOW TO GET THIS INCOME: Consider house hacking, where you rent out a room or basement in your residence while living there yourself. You’ll need to check local regulations for legality.
In the future, you can also look into renting out a property you own.
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Royalty Income:
This is the money you earn from allowing someone else to use your intellectual property, such as a patent, copyright, or trademark.
HOW TO GET THIS INCOME: This is a longer-term goal. If you’re creative, focus on developing content (e.g., music, books, inventions) that you can copyright or patent. Royalties come from licensing your work for others to use.
You can also create digital content like videos, online courses, or blogs that can generate ongoing revenue through licensing or ad revenue.
My Experience in building income streams (and a list of avenues I use)
I started earning income by getting a job (earned income) at a financial services company. My work experience further exposed me to interest income where I learned to save with apps like Vbank, Piggyvest and my personal favorite – SEEDs by Anchoria.
Capital gains and dividend income became a part of my income stream when I finally understood Bamboo and Risevest (these are mobile apps to buy US stocks and save in dollars). Then, I have gained Profit income during the sales of my books. This also came with royalty income when I learned how to sell and publish books on Amazon.
I have never earned anything from rental income but it’s something I will definitely try later.
Trust Yourself First when Building Wealth
What works for me might not work for you.
That’s why building wealth and life itself is so fascinating. I have friends who built businesses (profit income) and it is their major source of income.
There are also friends who ventured into cryptocurrencies (capital gains income) and it became the hill they are willing to die on.
The options are limitless, my friend.
Do your research. Gain knowledge. Acquire skills. Keep building on what you already have.
And that’s how you start generating multiple streams of income, contributing to your financial independence and long-term wealth building.