Following on from my previous blog "Passive Income And How It's Generated". This blog is how you can maximise your earning potential and lower the risks due to economic changes.
An income stream is quite simply what you do to earn money, your job is usually your first source and for most of us the only source of income we have. Some of us even take a second job which would be your second stream of income. The trouble with this method is, how many jobs would a single person physically be able to do? And the reason those people take on more work is due to not earning enough money. So, when some pompous idiot like myself starts talking about passive income and setting up a systemised business to free up time and earn more money, the most common excuse for not doing anything about it is, "I don't have the time," or "I don't have the money". Of course, this common misconception is what keeps us at the grinding wheel for 40 years of our lives and will be covered in later blogs.
Whenever I speak to anyone about this, this comment tends to annoy a lot of readers, because it is hard to get our heads around earning money for doing "nothing", although, you're not earning money for doing nothing, you are earning money off the back of something you have done. we have been brought up and told otherwise all our lives and so it is understandable to have this mind set and just like everyone else, i too had that same mindset up until I was 33 years old.
The biggest difference between those that have money and those don't is their understanding and relationship they have with money. Some people would put this in the category of money mindset, but i believe that more often than not, people who haven’t grasped the concept of passive income are usually ignorant to the fact that money attracts money though compound interest (Stunning topic), therefor would spend their money on liabilities instead of investing on assets and wealth generation. but you don’t know, what you don't know!
Have you ever asked yourself, "what would I do if I won the lottery"? If your response to this question is along the lines of, "I would buy a nice car, house, holiday, new furniture, give some to friends and family. then the odds are that you have a poor understanding of finance and are inevitably going to be at the poorer end of the financial scale. Whereas those with a sound understanding of finance would probably talk more about investing in property, stocks, bonds, business etc.
The subject of assets and liabilities was also briefly covered in "Passive income and how it's generated"
Financial thermostat in a nutshell is the level of income you are prepared to earn before being satisfied and not willing to do any more to increase your income.
Let's say for arguments sake that you read my blog on passive income and have started to generate an income of £5000 per month from affiliate marketing a single product online. Now, those people with a low financial thermostat would be satisfied with this income and be quite happy to not do anymore other than just wait for the checks to roll in and go on a spending spree every month.
Those with a high financial thermostat would exploit their free time and passive income to go ahead and set up another stream of income, often resulting in greater returns.
This in a nutshell is the difference between the "well off" and "mega rich".
Money mindset is in my opinion the foundation to wealth generation. "Whether you think you can or you think you can't. Your right." - Henry Ford the founder of Ford motor company and business man.
A great blog written by Diana Jones called Money mindset and its importance, talks more in depth about the mindset of wealth generation and how it has been spoken about by other rich and famous people over the centuries. well worth a look!
How often do you hear? "It's easy for you to say, you're loaded." Or "Bet his/her parents paid for it." Or "They must sell drugs!" I know, because I have said it myself and friends have said it to me whenever we see anyone younger than 30 years old driving nice flashy sports cars or own nice big homes. This is the language of the poor and it will get you nowhere. rather than talking to them and ask them what they do, or how they themselves generate their wealth. it's too easy just to push the subject to one side and to make ourselves feel better, we tell ourselves that they couldn't have generated that sort of money fairly or legally.