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For long-term success, have extra income sources

12:41 AM, May 2, 2013  |  Comments
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Question: I'll be graduating from college soon and do have a job offer. I also have a huge amount of loan debt. I have watched my parents continue to work even though they are well past the age where I hope to retire. Do you have any advice for creating more income?

Answer: Many young adults are preparing to graduate from college in the next few weeks and embark on their first career. The fact that you have a job is a wonderful accomplishment, especially in this economy where so many recent college graduates are unemployed. However, if you want to be financially free then it may take more than a job with an employer to achieve this goal.

Students spend thousands of dollars on a college education to learn how to develop skills that generate income from employment. Employment income is earned when you work once and get paid once. If you don't work you don't get paid.

You should look at your career as an investment, and invest in your own skills so that you can move up and eventually have an ownership position (through options or directly) in a company.

If you can complement your traditional earnings with additional streams of income such as rental property, investment income, a part-time business (especially one that is more of a passive nature including residual income-producing activities), these can assist you in achieving financial freedom.

We gave a presentation recently to a group of college students where we discussed the importance of wealth building by diversifying income and assets. Short-term income that is created from your job as an employee is important but the key to financial freedom is to create long-term wealth.

In our society we teach our children to go to college, work hard and get a job. Along the way we also tell them to participate in their employer's profit sharing program and save enough money for an emergency fund.

While these recommendations are very good it still may not be enough. As we have seen over the last few years, sometimes things happen, such as a recession, loss of your job, illness, etc. That is why we it is extremely risky to depend solely on one source of income.

Even if you land your dream job, something could happen to that single source of income. Your employer could go out of business or simply decide that they do not want you in their company any longer. Assuming you are able to fall back on your emergency fund it won't sustain you long-term.

That's why it's important to have multiple streams of income to be more financially secure. There are several other reasons why it's important to have a Plan B, and even C, whether it's for retirement, paying down credit card debt, repaying college loans or saving to send children to college, to name just a few.

Here are a few things you may want to consider as you begin your new career:

? Set personal and financial goals. Where do you want to be five, 10 or even 20 years? What actions must you take now to achieve the success you want in the future?

As a young adult you may believe that you have plenty of time to set goals but the sooner that you proactively begin to prioritize what you want to accomplish in life, the more successful you will be. Also, a goal is only an idea until it is written down, so list your goals and put them in a place where you see them daily.

? Surround yourself with successful people. Listen to what successful people have to say. What qualities do they have? What can you learn from them? Apply the knowledge you discover to improve and grow personally and professionally.

? Cultivate relationships and seek mentors. The relationships you build over time can help you achieve your current and future goals. You can begin to position yourself as a leader and help others.

? Give back to your community and those around you. Having a caring and helpful mindset will help you grow as an individual as well as a professional. Develop a personal mission statement that incorporates an attitude of gratefulness and abundance including the importance of giving back.

? Look for opportunities. You never know what's around the corner but you have to be open to new ideas and possibilities.

? The more you learn, the more you will earn. You won't achieve financial freedom by watching TV. Read books and listen to discussions on personal growth so you can incorporate best practices in your life and career.■

Tom Cooney and crystal faulkner


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