Do you know the feeling of your income going out as fast as it comes in? Do you see your money come in and immediately go out on a mortgage or rent, basic living expenses and debt maintenance? That means no money left to pay off and reduce debt. No money left to invest in anything. No money left for any kind of nice to haves. No money left to change anything about the financially suffocating life you are living.

This is financial paralysis and I know it well. It happens when you work all the time you have available, but do not make enough money to cover basic living requirements or achieve your goals.

You easily get into more debt because you have no choice but to use that overdraft or credit card to cover the odd emergency. You are not frivolous. You may well be doing something great like putting yourself or your children through school, or setting up and growing your own business, like I am. You are not spending your money on excessive clothes, shoes and beauty treatments. You are not sticking your summer getaway on your credit card. No. You are very self conscious about wearing bobbly jumpers and making do with five year old boots! It’s not where you want to be.

You are stuck in a very lonely place, facing your financial demons, the mistakes of your past and a debilitating money mindset. You know you need to make changes, or be forever in this financial hole. But how? You have no more time left in your day to work. You have no spare money to pay off debt. You can’t scrimp and go without more than you already do.

I’ve worked for myself for the last 10 years and things haven’t quite fallen into place as quickly as I would have wanted them to! Yup, I’ve been building my business for a decade and after 10 years of living in financial paralysis, I finally had the aha moment that is changing how I allocate my precious time.

Understanding short, medium and long term income

I have realised there are three different types of incomes - short term, medium term and long term income.

Short term income is quick to make and usually involves trading time or items for money. Examples of short term incomes are jobs, freelance work and selling things you have.
Medium term income usually involves creating something that may pay off well in a matter of months. It often requires significant time investment. Examples of medium term income are creating and then selling an ebook, online course or creative piece like music.
Long term income takes the longest to generate and often requires the most resource investment (time and money) but it can be the most lucrative. Examples of long term income are building a business, either in traditional terms or say, digitally, where you have digital assets like a blog, collection of ebooks or online courses that generate a substantial business income.

All types of income, short, medium and long term, require varying degrees of effort depending on what you are doing, the amount of resources you can invest and how much value you want to get out of them.

Using short, medium and long term income to positively impact your finances

If you are struggling financially, either because your job doesn’t pay enough or because you are building something that does not immediately pay well, then understanding short, medium and long term income could help you navigate out of the financial challenges you face.

Understanding short, medium and long term income changed my thinking. I stopped judging jobs so negatively (short term income). I stopped being frustrated with the freelance projects I had to take on (short term income). I carved my time up differently, allocating some of my time to short and medium term income generation so that I wasn’t focussing all my energy on long term income alone.

Short term income

Short term income is when you generate immediate income within a month. It usually involves using your time to generate money such as a full or part time job, or doing one off or regular paid projects.

There are all kinds of projects you could undertake depending on your skillset, how much time you have and how flexible you are. Some people supplement their job income with related paid projects. I know of a teacher who offers private tutoring on a weekend and a hospital caterer who supports a wedding caterer when required.

Other types of short term income generating projects could be as simple as babysitting, walking dogs, mowing lawns or selling things that you no longer use through Ebay, Gumtree or car boots.

You could also take advantage of opportunities from modern living. Deliver for Amazon, become an Uber driver or deliver for Uber Eats. You could hire out something you own, like your drive or a living space.

Finally, you could use technology and earn from online surveys (I focus on Prolific Academic and YouGov) and other interesting income generators like website user testing, or online paid research.

Medium term income

Medium term income is when you generate income within 3-18 months. There are many examples of how you can start a side hustle and generate income in a few months. Some of these are:

Making and selling things like wedding stationery or wooden toys (Etsy)
Creating and selling low content books or ebooks (Amazon)
Starting a blog
Creating an online course
Generating affiliate income (Amazon)
Matched betting (Profit Accumulator)

All these things can take a few months to create, set up, reinvest in and start earning from.

I’ve also discovered some easy, low cost, low earning medium term income generators. The financial rewards are not life changing, but if you want your surplus to go from zero to a few hundred pounds, which you can then deploy to debt repayment or income generation activities then you’ll appreciate these.

The financial rewards of medium term income can vary from a few extra pounds to substantial, and possibly ongoing income. Some medium term income, like launching a successful online course, could change your life significantly. The ongoing income possibilities could mean leaving behind some time consuming short term income activities to focus on more lucrative medium to long term income generation.

Long term income

I have finally come to realise that building a business is a long term investment, just like investing in stocks and buy to let property. Long term income takes time to build. It’s when the fruit of your labour comes from planting and growing a tree. And, boy can trees take a long time to grow!

The financial rewards of long term income generation can be huge but there is one important factor - you absolutely need short and medium term income while your long term income tree grows. Why has it taken me a decade to realise this?!

Lessons I’ve learned about making short, medium and long term income work for you

Due to a mix of arrogance, lack of knowledge, a dreamy state of, ‘everything will be fine’ and to a certain degree, although I hate to admit it, having a husband whose income significantly contributes to our standard of living, I have spent 10 years focusing exclusively on long term income. I put all my eggs in one basket and spent all my time building a business, which for a gazillion reasons still sits in the usually break even, sometimes profitable bracket.

By completely sacrificing short and medium term income for such a long time I have found myself yo-yoing between paying off debt and building debt. I have not had the cash flow required to take up opportunities to make more money. I have never had enough to really live my life now, which has forced me to repeatedly settle for less or go without.

I am most definitely pro long term income generation especially passive income models. But I have finally woken up to, and have a newfound respect for short and medium term income.

Initially, it is short term income, like a job (and cutting down on your costs) that will generate the surplus you need to allocate to more financially rewarding medium and long term income generation.

While you build long term income, you need short and medium term income to bolster your low or erratic income, ensure you don’t spiral into debt, grow your medium to long term business ventures, invest in yourself, save for retirement, have money for life's surprises and have some fun along the way!