As more companies look to streamline their operations to improve profitability, restructuring and job losses are unfortunately becoming more commonplace. Samke Mhlongo-Ngwenya, Founder and CEO of TNC Wealth Partners says it’s important to diversify your source of income to ensure that you and your loved ones are financially secure.

“The current South African indebtedness levels show that people’s incomes are not sufficient to fund their living and their aspirations and as a result, many resort to using debt. It is estimated that only 23% of South Africans have money left over at the end of the month, therefore we can assume that up to 77% of South Africans will borrow money to fund their needs,” she says.

She adds that there are two types of income streams:

  • Active income streams are those income streams that require activity to be generated. In the absence of the required activity, the income will not flow. Examples include board memberships, network marketing opportunities and freelance work.
  • Passive income streams are those income streams where the income flow is not dependent on the activity of the recipient because the investment generates the income. Examples include rental income, dividend yield and interest on a savings product.

How to establish an additional active income:  

  • Freelance or consult: The simplest way to establish additional income is to sell your skillset to a wider audience through consulting or freelance work. This should be done in consultation with your current management and with their approval.
  • Join a board of a company: Board membership comes with personal liability so an individual should ensure that they are comfortable with the corporate governance in the company they are joining, and that they have the requisite competence to successfully execute on their fiduciary duty as a board member.
  • Learn how to trade forex: It’s advisable to open dummy forex accounts to test your aptitude for forex trading. If you have a knack for it, you could stand to make a lot of money.
  • Sell your skills: Consider how you can make money out of your current hobbies or skills? For example, you would write an eBook, sell your photographs online or bake for a profit.

How to establish a passive income

Passive income is more difficult to establish without an initial investment.

  • Rental income: Consider this investment wisely because income only contributes to your pocket if the rental amount received is higher than the bond repayment and other associated costs of running the rental property.
  • Investments: Again this requires an initial investment amount to be made, but the dividends or interest earned on investments stands to benefit you significantly.

Mhlongo-Ngwenya suggests starting where you are with what you have. “A graduate entering the workplace will not readily obtain a board membership, but they could capitalise on the growingly lucrative social media marketing industry to generate income. Choosing the right income strategy will be determined by your skillset, time capacity, existing resources, existing capital and network of people.”

In summary, the “right” income strategy is the one you can capitalise on without losing any current assets you may have, and one that you can embark on immediately.