Primary Salary

For most people, their primary salary is their main income stream.  In fact, I think everyone starts this way (if you didn’t, I’d love to hear your story!).  The goal is to maximize your primary salary to a point where you are generating enough free cash flow to reinvest in secondary income streams.

How do you do this?  Well, try to get the highest paying job you can!  Ask for a raise!  Utilize services, such as, to see how your salary competes with others in your same job.  Some companies really force employees to leave to get a raise, and then come back for another raise.   This industry jumping promotional strategy is very common and could work.

Or, there is another theory for your primary salary – generate enough to have a little excess cash flow, but do it at a place that you can work stress free and have time to dabble in other projects.  A good friend of mine has this setup – he works 10-5 and makes $50,000 a year.  This allows him to easily cover all of his expenses, but the shorter hours and flexibility in his job allows him to pursue his secondary income generating ideas!

Either way, the great thing about your primary salary is that you can usually get benefits, such as health insurance, that really protect you while you are pursuing your other ideas!

How many streams of income does the average millionaire have?

The commonly cited statistic is that the average millionaire has seven streams of income.

That said, as mentioned, finding the data that backs this up is next to impossible.

At the same time, it’s safe to say that the vast majority – if not all – millionaires have more than one income stream. 

I mean, just look at yourself. If you earn money from your job, have a 401(k) and keep your savings in a high-interest savings account, you’re already at three income streams! So if that’s the case for you, imagine what the very wealthy are doing to earn – and maintain – this wealth.

And while it may be tough to find proof of millionaires having exactly 7 streams of income, there was some data that could indicate that this is true…

What are the most popular income streams of millionaires?

Based on data issued by the IRS, we can see the most popular income streams for a certain portion of millionaires. That is, the list of the most commonly held assets are:

  1. Publicly traded stock – includes individual shares and mutual funds
  2. Other real estate – includes commercial property, REITs and “residential property other than the personal residence”
  3. Cash assets – not only is this actual cash, but also bank accounts, certificates of deposit and money market accounts
  4. Bonds
  5. Closely held stock – this is stock in companies that isn’t publicly traded
  6. Retirement assets – IRAs and 401(k) accounts fall into this category
  7. Personal residence – where the person lives
  8. Real estate partnerships – these are partnerships where the main function is the ownership of real estate
  9. Other limited partnerships
  10. Other non-corporate business assets – this is where the person is either a sole proprietor or a partner in a business partnership

This data is taken from the IRS’ estate tax statistics, meaning it shows the assets held by people who died in 2018 whose estate when they died was worth at least $5.49 million.

(There are some exceptions, with people who died in earlier years and who may have been worth slightly less, but that’s very few in the data set.)

So what does this show us? Well, it gives a pretty good indication of how people at that level of wealth split their assets. While it’s true that not all of these are streams of income (such as your personal residence), many of them are.

In particular, it shows how investing in shares and real estate seem to be the most popular way for millionaires to allocate their money. This should be no surprise, given how these are pretty widely accepted as the most popular – and often most successful – forms of investing.

While this may not show us whether or not millionaires have 7 streams of income on average, it does show us just how common it is for them to have multiple streams of income – and should give a pretty good hint that you should aim to do the same.


How do you accumulate wealth?

Here’s the next key to the puzzle.

The key to accumulating wealth is uncomplicated:

  1. Sell your time for money,
  2. Spend less than you earn,
  3. Invest your savings so it will grow without your active intervention.

That’s it. It’s a simple input and output problem. And it’s also what separates the rich and the wealthy.

There is just one constraint on the whole system — your time in this world.

You have just 2.21 billion heartbeats. At 60 beats per minute, that’s a little over 70 years. Each beat matters.

There’s another constraint, and here is where wealth inequality rears some of its ugly head, and it’s known as Maslow’s Hierarchy of Needs.

You need to eat. You need a place to sleep. And both of those, and other needs, require money.

So in an ideal world, you could take your time to build a massively successful business (or maybe a few failures before the massive success), but in the real world, you need a job that will pay you now so you can feed yourself, clothe yourself, and secure a place to sleep.

I call it financial gravity.

If you want to really start tracking your finances, and I mean not just your spending but your investing (that’s where wealth is built), give Personal Capital a look. It’s a cornerstone of my financial system and I think you owe yourself a look. 100% free too.

Capital Gains Income

Buying and selling assets can provide you with an income known as capital gains. For example, if you buy stocks and shares worth $100 and then sell them on for $120, the capital gain is $20. 

It is essential to consult an accountant first about capital gains, as each country has different rules. Depending on the asset sold, the capital gains tax may wipe out all of your profit.

4. Royalties Licensing

Royalties are a powerful passive income stream for someone who creates their own products. It can be a process or idea that you then license the rights for others to use for a fee.

Someone’s ideas and created products are considered privately owned so you aren’t allowed to take them without their consent. It’s actually considered theft.

The largest example of this is for book authors. A book author licenses their work to the publishing house. The publisher then formats, prints, and sells the book. Depending on the book deal the author negotiated, they get a percentage of the profits called royalties.

While it may take a year or more for the author to write the book, they can continue to earn royalties for years after publication. This is a wonderfully lucrative passive income stream if you have lots of ideas and can produce products or get patents.

Being an innovator and creator is one of the main habit differences between a rich vs poor person. People who create wealth don’t waste their time being unoriginal.

Not all passive streams are equal

There is only one stream where you bear all of the risks but reap all of the rewards – the stock market. (we can quibble over the use of absolutes but I think you get the point)

In every other case, you bear more of the risk than the rewards you potentially reap because you need to pay someone who is actively working on it. If you invest in a business, you take on a lot of risks but you don’t get all of the rewards. Before distributions to shareholders, operators will be paid.

Not only that but in almost all other cases there is the illusion of influence, which is itself a psychological and emotional cost. If you invest in a business that your friend or family member is running, you can see how things can get messy. You have thoughts on how things should be done, they have competing thoughts if things aren’t going well… we know how this story goes.

That being said, the upside to many of the other options can far exceed the stock market and that balloon payment is very appealing. In five years, I built a website from $0 to seven figures. You cannot do that with the stock market.

The cash flow, leverage, and tax benefits in other passive streams, like real estate, is also very appealing. Donald Trump took a $1 billion tax deduction a few years ago! You cannot do that with the stock market either.

Finally, there are assets that have no passive income streams but that you can create a stream using the Buy Borrow Die estate planning strategy.


Big business has been diversifying its income streams for centuries. They expand their business operations into different sectors to generate new streams of income. Almost any company can diversify. A flower shop can develop a separate wedding flower business, for example, or offer mail orders. The most potent diversification is into a completely new business sector. But that takes a lot of effort and expense. 

An excellent study of a company that has grown and diversified is the Virgin Group. Initially started by Sir Richard Branson as a record label, Virgin has since expanded into aviation, holidays, mobile telephony, and much more.

An example of a good way for an electrician to find other streams of income is to work with property management companies. His core business may currently be private homeowners, but management companies often need additional tradespeople. Another route could be to start offering courses to people on basic electrics and how to stay safe with electricity.

Aside from diversification, there are other ways to generate income known as the seven streams of income;

  • Earned Income
  • Profit Income
  • Interest Income
  • Dividend Income
  • Rental Income
  • Capital Gains Income
  • Royalty Income

Many of these are not available to everyone. You need to have money already to benefit from some of these income streams.

7 Multiple Streams of Income Ideas

Here’s my list of the 7 multiple income streams:

  1. Dividend Income – Income from stocks
  2. Rental Income – Income from rental real estate 
  3. Earned Income – Income from jobs/side hustles
  4. Royalties – Royalties from books, inventions, etc.
  5. Business Income – Income from business profits
  6. Interest Income – Income from savings accounts, bonds, etc.
  7. Capital Gains – Capital gains from selling highly appreciated assets

If you’re ready to start creating multiple streams of income, check out the ideas below!

Online Business/Hobby Business

The final most common stream of income is creating a side business.  This business could be online or offline, and I call it a “hobby business” because it usually takes a form that relates to the owners hobby.

For example, if you are tech savvy or enjoy working online, you may sell of eBay, or create a website (like I did), or promote your services through a site like Fiverr.

If you work offline, you could do Partylite Candles, make-up like Avon, or various clothing and jewelry lines.

Don’t know where to start?

Here’s a list of 50+ Side Businesses You Could Start Today. Or, how about a list of 30 Different Passive Income Streams you can build.

How Much Do I Need to Invest to Become a Millionaire?

The amount you'll need to invest to become a millionaire depends on where you are in your life. You can afford to sock away less money when you're younger because you have more time to accumulate your wealth and you can tolerate more risk. If you put off saving until you're older, you'll have to put away more money every month.

How much time self-made millionaires devote to new income streams

If you have a consuming 9-to-5 job and/or other sorts of commitments at home and at work, carving out the time to devote to starting another income stream might seem daunting. Based on what I've learned from my research, you can start small:Set aside no more than five hours each week and begin slowly building something new. 

If you're not sure where to start, think about the subjects, skills, and activities you are most passionate about, and explore the ways that you could monetize one of those

In my research, other than consistent saving and investing, passion was by far one of the most important shared attributes of the self-made millionaires in my study. 

VIDEO 2:45 02:45 Barbara Corcoran: How your hobby can become a side hustleEarning

Video by Stephen Parkhurst

What Are The 7 Streams of Income?

1. Earned Income

Otherwise known as your salary or typical monthly income from your primary job. Earned income could be based on an hourly rate alongside bonuses, commissions and more. This remains the same whether you are employed or self-employed. This earned income is typically subject to taxes, although likely at different thresholds depending on the amount. 

2. Business Income

Alongside earned income, you may receive extra income from businesses you have set up. These are otherwise known as your side hustles, and may be made up from just one source or could be multiple.

It is typically found among your balance sheets, taking the difference between profit and loss. Once again, this is subject to taxes. 

3. Interest Income

You’ll receive interest on your bank account savings, although since 2020 this interest rate has likely fallen significantly. Ideally, it would match the level of inflation but these days, interest rates are very low.

Find out your interest rate by checking your bank statements. If you have funded any loans, you are also likely to be eligible for interest as the principal amount is repaid. 

Some banks with interest rates include CIT Bank, Aspiration, and Consumers Credit Union.

4. Dividend Income

The stocks and shares you invest in may yield dividends, or you be paid via dividend if it fits with your company structure. Dividends are more commonly known as a share of the profits.

For example, as the Director of an LLC, you are eligible to split your profits into twelve monthly dividend payments. Alternatively, some investments pay dividends quarterly or annually. 

5. Rental Income

Once you own property, you can begin collecting rental income as an added monthly income stream. Depending on the structure of your property (whether you’ve got it under a separate company, for example), you may be subject to extra taxes, so the yield of your property income should account for this.

As a landlord, you’ll likely have a Mortgage to pay as you acquire new properties. This should also factor into your rental income pot. 

6. Capital Gains

Capital Gains income is acquired through the sale of assets such as art, stocks, business, and loans. Income earned via this route is subject to capital gains tax but will often be acquired as a lump sum rather than consistently over time. Learn more about capital gains tax on the IRS website.

7. Royalties or Licensing Income

Are you a creative individual who produces music or photography content? Licensing this for specified public usage means you can create royalties as an extra stream of income.

Royalties are not likely to be significant on their own, but mass production/usage of your content is likely to bring in a steady stream. 

How Many Income Streams Do You Have?

Now that you know the 7 income streams of millionaires, compare that with how many you currently have. Most people only have one or two with a job and rental property being the most common.

The benefits of having multiple income streams in that you’re more recession proof. Financial hiccups are less likely to derail your trajectory. If you lost your job or a tentant isn’t able to pay rent, you aren’t left bankrupt.

This can create an immense peace of mind. By leveraging your time now to create additional income streams, you can be on the path to ensure your family’s financial security.

Rich people understand that there’s only so much money to be earned by trading your time for money. If you truly want to build wealth then passive income streams are where your time should be spent.

There’s no truly passive income stream where you never have to put in effort to earn money. Most passive income avenues require intense work upfront but allow the ability to earn for years without any additional effort.

Let me know what income streams you currently have or want to add.

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Steffa Mantilla Steffa is a Certified Financial Education Instructor (CFEI) and the founder behind Money Tamer. Her 12-year background in operant conditioning and positive behavioral change training is used to help people find effective motivators to change their harmful money behaviors. Steffa explains the reasons “why” behind people’s financial behaviors and how to successfully change them. After paying off over $80,000 in debt through budgeting, she now teaches families how to get their own finances in order. You can learn more about her here.


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