Most Americans solely rely on their earned income from their job to keep them afloat. I don’t know about you but if I only had 1 income even as a 20-year-old, I would not be able to sleep at night.

No way José!

Not only is 1 income is the riskiest path for anyone, anywhere, but if you are a blue-collar worker living paycheck to paycheck getting paid for the amount of manual labor you put in without receiving benefits or pay when you’re not physically working, your main priority should be to increase your sources of income especially in this volatile job market.

Although this sounds preachy, this is only for your safety and overall happiness. To stay financially afloat, you cannot be reliant on 1 source of income to keep up your lifestyle, especially as inflation is on the horizon.

The disappointing reality is that the majority of readers here don’t need to hear this. They probably know what’s a dangerous move or not when it comes to their finances and those that need to make the fix, aren’t digesting this information.

Hence the widening wealth gap in this country. Financial literacy isn’t taught in school and for those who need to learn about it, not the Ivy grads with donor parents or entrepreneurs with 24 income sources, it’s difficult to convince them to get educated on their own. So if you could do yourself a favor and not get too comfortable with any job, you’ll be in the best place.

Fun Fact: A typical American has 12 jobs!

Any job and especially the ones in the office are replaceable anytime. As much as we want to believe we are the best worker and if we work our butt off anything is possible, we still have to be realistically cautious about the future to be safe.

Although the stock market has been in a bull run since ’08 returning on average 10% each year climbing to news highs showing no indication of slowing down, a recession hits every 8–10 years according to history. If we know something about this world, history always repeats itself so brace for uncertainty.


Image by Annie Spratt

Funny Money

If money grew on trees, we wouldn’t have the purpose to work. This would lead stock valuations and the economy to flip on its head. All companies would be trading at 10k x earnings like Tesla and there would be no balance of power.

That’s why you have a job. To support your family, the country and keep yourself motivated until retirement, if you ever chose to have one. If everyone had the same amount of money, yes there would be equality, no comparison, and theft but people would still want to abuse what they have because there would be no innovation and motivation to do something better which would drag countries into a loophole, debt and bull rage leading to drastic drops.

Building additional sources of income doesn’t mean you need to take on another dreaded 9–5 job. It means you just need to diversify, think outside of the box, work with others and let your money work for you not against you so it ends up letting you live a more peaceful life with less work.

wealth formula

Image by Markus Winkler

The 7 Most Basic Income Sources For Everyone

No doubt establishing passive income sources requires work upfront but rarely any money to put down to get going. Even when purchasing a rental property to lease, you can put the minimum suggested deposit down of 20% and take out a mortgage on the rest.

Money is never an excuse, your patience, commitment, and grit is what’s needed.

With too much money, we wouldn’t know what to do otherwise.

So let’s dive into the income sources that everyone should and can have without breaking the bank.

These are the most common yet overlooked:

#1 Earned

The earned income stream comes from your primary source of income which usually includes your main job or any task you do for a decent amount of hours per week. With any job, whether it’s working for the government to hospital, it’s ideal to make sure what’s included with the paycheck because they can make or break the position.

These perks include health/life/medical insurance, 401(K) plan for retirement, paid leave, time-off, and possibly bonuses. You don’t have control over who your boss is or the types of people you work with, but you can control where you choose to go.

Ultimately the best jobs aren’t the ones that offer flashy titles/positions or salaries. Instead choose an earned income job the makes you fulfilled, able to wake up to daily to, take advantage of benefits from and a team that cares about you.

Don’t bother working for a place that seems impressive to others. We all make mistakes and are usually lured into prestigious places when we’re out of school to impress others, but quickly you realize that money cannot be the sole objective.

Lastly, never work for your time, or as Warren Buffett states, “you will work till death”. Putting in manual/physical labor to get paid paycheck to paycheck isn’t sustainable and will kill you financially.

#2 Profit

Profit income is considered any income that is derived from buying and/or selling goods and services. You can make a profit from delivering groceries on GrubHub to selling a piece of jewelry on Etsy.

Especially Millenials to GenZers have made ‘profit building’ such a lucrative business by dabbling in different areas and on multiple sites from Patron to YouTube, they’ve made it a full-time gig. But remember, posting one video or selling one shirt on Mercari, won’t cut it. It needs to be long-term and show consistent earnings to take on full-time.

#3 Interest

This is money that barely grows but gives you some return for either lending out money to someone through P2P lending or earning a small return in CD (Cash Deposit Account), which acts as a high-interest saving account without keeping it as cash or on a bond in form of a yield.

Pick a high yield savings account or CD to save your money and let it grow without deflating due to inflation as cash. Once you’ve set aside your 6–12 month emergency fund, you can start setting up a savings account alongside your checking.

#4 Dividend

Dividends are money earned from stock gains but don’t be fooled, it isn’t “free money”.

There is a handful of reputable, conservative, and older well-established companies such as Coke to AT&T that offer a dividend yield to attract shareholders to their stock. They ultimately use it to drive investor interest yet with the typical yield of about 2–6% it isn’t driving much of a return plus without a dividend, their market cap to P/E (value) of the company could be higher.

The concern about dividend-paying companies is that they aren’t using their retained earnings properly. High-growth newer companies such as Airbnb to Tesla don’t offer dividends because they would rather reinvest their extra revenue into future plans to grow the business.

They don’t want to waste their money and rely on stock growth.

A dividend yield higher than 7% should be concerning because it entails the company is stagnant and cannot grow much further. Don’t be simply lured into dividends and a cheap price of a stock. It might mean the company went through a stock split (lowered the stock price to offer more outstanding shares but the value or market cap of the company hasn’t changed).

#5 Rental Property

Rental income is a form of profit but can easily act as the main income source especially once you own several properties or invest in them through crowdsourcing or REITs (real estate investments in the stock market).

As a 20-year-old who manages a tenant, it can feel like a full-time job and shouldn’t be taken lightly. Yes, you can earn a juicy return once you find a reputable renter that stays for a few years and doesn’t damage the property but it all takes time. I was fortunate to buy at the trough of the NYC market when prices were low and Millenials who always had the dream of living in the city could take advantage of these lower rents as a result. I bought the dip just like in the market.

Make sure to screen your tenant(s), be familiar with the non-refundable costs, brokerage fees, renovation, and what it takes to check in with your tenant once in a while to make sure they are not destroying your place. You can read about this challenging yet rewarding process of renting to tenants here.

#6 Capital Gains

A big part of the wealth gap deals with taxes. Biden recently announced the capital gains tax that will be set for upper-class Americans. Unfortunately, this legislation has to be passed not because paying taxes shouldn’t be done, rather because the rich typically pay less anyway and will only find more loopholes to get into.

They have the flexibility to move to zero tax income states where their beach home resides, hire lawyers to hide their money in tax shelters overseas, charge their expenses to their business to count as a liability, earn money through the stock market and end up paying no or little to none in capital gains tax if sold.

On the other hand, lower to middle-class Americans easily pay more because they typically hold onto one job where they’re charged income tax on their wage. That’s why having 1 job is not only disastrous for your financial stability, you are paying more in taxes!
Just like in the market, if you sell your gains in less than a year, you are charged income tax not capital gains tax, which makes big difference over time and cuts into the paycheck.

Aren’t taxes supposed to bridge the divide between the top 10% and the rest of the country? At least Biden is willing to make this change. Republicans only serve the rich.

#7 Royalties

Last but not least, this stream of income comes from selling intellectual property or any sort of product/service you’ve produced and sold.

Royalties are simply payments received from others using your work. Other examples would include, book publishing, song rights, YouTube channel, etc.

I’m currently earning royalties from selling my startup. We came to the negotiation instead of being paid a lump sum for the whole business along with an equity split, I would be given consistent earnings (royalties) over time.

rolling the dice

Image by Blogging Guide

Establishing several forms of income streams is vital to financial independence, prosperity, and growth. To fuel the economy and your livelihood, you must be able to never depend on one sole job because when business is down, you’re out. Talk to a financial advisor today to learn more about establishing financial independence through different forms of income.

Stay safe and stay realistic.

Anyone can become financially free if they truly wanted to.

About the author: Mia Gradelski

Hey I’m Mia, a NYU student passionate about blogging what’s on my mind all finance, tech, lifestyle-related. I'm also an investment analysis intern here at Atticus!

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