Your No.1 asset

If you are an average working person, you are your No.1 asset. As long as you can work, you can produce income for your family. The problem, however, with being your own best asset is that you have all your eggs in one basket. If you become disabled in a traffic accident or suffer from a debilitating stroke, your family has just lost its income stream. But that's what insurance is for, right? Right; but insurance policies aren't perfect, and I'm not one to leave all of my risk in one spot. I'd rather produce enough other income-generating investments to replace my pay entirely. That, to me, is financial independence.

Diversify

Everyone who talks about finance will say something about diversification at some point. Many people don't know what they are talking about when they say it. True income diversity would include multiple forms of income. Working three different jobs is not income diversity. Having a job, investing in dividend stocks and investing in growth stocks represents income diversity. Everyone needs some diversity to make sure they will have income no matter what happens.

For example, I know a former colleague who makes a great salary at his new job. His wife works as well, and they don't have children yet. Many people would say they have it made with a double income and no children. I, however, believe they have it made because my friend has invested in rental properties. His two duplexes pay their own expenses and give him a second income source. To put the icing on the cake, my friend also invests in a low-cost mutual fund. If he really needed to, he could collect income from the rentals and the dividends from the mutual fund shares.

Create something

This is something I'm working on now. You see, if I were to replace my income with rental properties, I would need to have several million dollars of mortgage debt to my name. Rentals aren't 100 percent profit from rent, so it takes several units to even replace the median wage of $40,000 per year. But I don't need to go into debt to create something. Stephenie Meyer wrote "Twilight" after her kids went to bed at night. She made millions from three months of moonlighting! You can't do that with Vanguard index funds or by buying a duplex.

You don't have to be a writer to make something that replaces your income. Maybe you can design an app or a website. Maybe you can patent an improved design for backpack zippers. The guy who invented those whisk balls for shaker bottles doesn't make them; he owns a royalty to his idea and collects millions. Whatever it is, each of us can create an idea or product that can replace our current income. The hard part is the thinking. Take the time to think, and then put in the hours to create something. Once you've created it, sit back and binge-watch all you want on Netflix as your creations make money for you.