It is becoming more common that a single income is insufficient for Malaysians. It’s time to diversify your income stream if you haven’t done so yet.

The pursuit of financial freedom requires planning and hard work. However, the basic formula for gathering wealth is simple – your income should far exceed your expenses.

What does the word income mean to you? For many people, income only means their monthly salary from their full-time job. If you are one of these people, this article seeks to open your eyes to look beyond a single income stream.

Income can be divided into two categories:

  • Active income is a type of income where you are actively involved in and spend much of your time on a profession or business.
  • Passive income is a type of income which is generated without you needing to be very involved in the process.

Take a few moments to read that again and think about what money-generating activities you think fall under each category.

In this article, we have further broken the 2 categories mentioned above into 4 income types (with examples) that can give Malaysians a clearer idea of what they can do to diversify their income streams.

As you read, think about how these options can be applied in your life.

#1. Salary

This first one is pretty straightforward. Your monthly salary earned from your full-time profession is a type of active income. Whether you are employed or self-employed, this is the monthly income you get from your main career.

There are many ways you can increase your salary. Start by asking yourself these questions:

  • How do I qualify for a raise/promotion?
  • Should I upskill myself in order to qualify for better opportunities?
  • Do I practice a personal culture of continuous learning?
  • Am I marketing myself or my business well?
  • Is the grass really greener on the other side?

While you would want to spend your time and energy career-building, it is also worthwhile to spare a thought for the next 3 income types as well.

#2. Side Hustle

This is commonly also known as a side job, part-time job, or side income. Getting your hustle on and working on one or more is another form of active income. There are very many options out there for you to pursue. The question is whether you have the discipline and determination?

Maintaining a side hustle is challenging as there are many daily distractions that can lure your attention away. To fight the demon of procrastination, you must have a good plan firmly in place and a goal clearly spelt out. Create milestones in your plan so you can recognize and celebrate achievements as you gain them.

What side income can you do? Take stock of your life and consider these factors:

  • What are you good at?
  • What don’t you mind doing?
  • What do you have time to do?
  • What are the pros and cons of various options?

Some options you can consider include:

  • Start on online dropship business
  • Make things to sell (e.g. bake, carpentry, craft, plants)
  • Taking up a second job such as working at a convenience store
  • Be a delivery person (e.g. Food Panda, Grab)
  • Freelance (on-demand when jobs appear, or dedicated ones like giving tuition)

With so many options, there has got to be one that is right for you. Never try, never know ;)

#3. Investment Income

Have you ever wondered why wealthy people are often deeply involved in investing, and not quite understood why? The answer is this – passive income generated from their investments.

When you invest, and by the way you don’t have to be rich to start investing, you are putting your money into something that grows your money for you. As your money grows, you can receive the profit.

Why is this considered passive income? While it does require you to put effort in studying what investments you want to put your money into, the actual growing doesn’t require your participation. You don’t need to clock in hours or work up a sweat.

If it’s so easy, why aren’t there more people investing? For starters, the world of investing is huge and can seem overwhelming to a beginner. Another reason is that the concept of passive income may seem strange to those with a traditional mindset. To them, the idea that money can grow without them shedding sweat feels like a scam or at least a gamble. By doing your homework, you can be assured that you are putting your money in reliable hands.

For starters, these are some familiar choices for investments available to Malaysians:

If you are keen to take bigger steps with professional guidance, we recommend you consider engaging a licensed financial planner to help you out, no matter how big or small you think your money is.

#4. Residual Income

This last income stream is an interesting one. You know it even if you didn’t think of it when considering possible income streams for yourself.

Residual income, or active-turned-passive income, is one where you pumped in a lot of hard work before and you’re now either fully hands-off or comparatively minimal maintenance is required.

Doesn’t that sound enticing? It is a baby you created yourself from your hard work that is now fully-functional with little or no attention needed from yourself.

Options that fall under this income type include:

  • Owning a frequently-visited website/blog
  • YouTube channel
  • Royalties from a owned or patented piece (e.g. book, music, photography)
  • MLM business that is mature with a sufficient number of active downlines
  • Thriving family business that has been handed over to the next generation

Consider which you want to experience in X number of years’ time and start your efforts today in the hope of an easier tomorrow.

Are You Having 1, 2, 3, or 4 Types of Income Right Now?

To increase your wealth, you need to ensure your income exceeds your expenses. In this day and age, the cost of living expenses are high and many more Malaysians are seeking multiple income streams. It pays to expand your energy on taking up one out of each of these four income types. Seek within yourself for the determination you need to find time and energy to develop your options.

In the end, we all have 24 hours a day, but how we choose to use them is the differentiating factor. How are you choosing to spend yours?

 

Signup for a MyPF membership and get connected to a licensed financial planner.

 

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