Blackrose Accountants showed that the majority of workers have only one income stream, their paid employment, and have to make this income stretch to meet the monthly spending. So naturally they find it difficult to save.
Savings are the difference between how much you earn and how much you spend. As highlighted in my earlier post 5 steps to saving money, savers must first take stock of their spending then group it into essential and discretionary spending. The difficult bit comes when they must choose which items in their spending to reduce. Many feel life is too short not be able to enjoy some pleasures such as smoking, a few beers, taxi cabs rides, a few take away meals or nights out with friend.
Therefore for these people the best way to make savings is to increase their income streams. The best way to do this is by developing multiple active and passive income streams. Over time these streams will generate more income than your current spending thereby giving you surplus funds to save.
Passive Income Streams
Passive income streams are better over the long run because they provide income without an additional personal work contribution. However passive income streams almost always require some money/capital to start with. The cycle for generating passive income is- -increase your active income to a level higher than your spending
- -Save the surplus income
- -Use these savings to invest in one of the passive income streams
- -Save the surplus income from the passive income stream
- -Use these saving to invest in another passive income stream
- -Before you know it your passive income will be greater than your active income
1. Affiliate marketing
Affiliate marketing means you sign up with a company and/or entrepreneur and sell their products. For example, if you start a tech website, you could become an affiliate of a web hosting or anti-virus software company. You need to build traffic via your website, email marketing and social media. Like all these “passive” income streams they require some work. The initial work and effort required to generate traffic to your website is great. While you could pay for this to be done for you will never understand the nature of your nature of you business so when the trading environment changes as it will you will not understand the best way to navigate through it. However once you have your marketing strategy right income can be generate while you are asleep.2. Property
Property is a great way to earn extra income. Investing in property can include buying to fixing up and reselling or buying to rent. Both these require large amounts capital in the form of cash for deposits and renovations and loans and mortgages. If you can partner with someone, do it. You will be able to share the initial cost of the investment. You’ll have to visit property auctions to get a property at a good price. Another alternative is to become an estate agent. Contact private landlord who are advertising to rent their properties and offer to rent it for them. Over the long term property is a great wealth generator3. Financial Investments.
Shares, bonds, ISAs, pensions, etc. are great ways to earn passive income. If you’re not financially savvy, you’ll need to speak to a financial advisor who’ll help you choose the right investments. Over the long term financial investments are another great wealth Blackrose Accountants are specialises in providing bookkeeping, accountancy, taxation, payroll services and business development and advisory services The areas we cover include- Wembley
- Brent
- Willesden
- Harrow
- Kingsbury
- Kenton
- Pinner
- Croydon
- Thornton Heath
- South Norwood
- Crystal Palace
- Selhurst Park.
- Beckenham
- Streatham
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