Three Different Types of Income

[Mika]

Based on what kind of work you are doing and how you are generating income, your income will be generally classified into three different categories. They are:

Active Income

Passive Income

Residual Income

Active income is an income that you generate by working actively. If you have a 9-5 job, you have an active income. If you work on contracts and get paid after the completion of the task, you have an active income source. Most people have an active income source.

Passive income is something that comes in without any ongoing work or from the work you have done in the past. If you have invested in the stock market or real estate, that’s passive income. If you have a profitable business that’s a passive income.

Residual income is the income that you generate from something that you have done in the past. If you receive retirement funds, pension plans, insurance bonuses, and royalties from your creative work these are all residual income.

 

[Sotherefore]

A lot of people are very much interested to have a passive income because of the the advantage that comes. With passive income you may have opportunity to engage in other things in your life that can also be profitable to you , such as establishing a private business and maintaining it on your own even when your passive income is still generating you profit actively..

A lot of people that are working online on paid to post platform are making active income it is also a nice way of making money provided you have a legit way of making money that is likely to last for a long period of time. That's what matters.

In most cases a lot of people are likely to make much money when they have a skill, that is why when you are not able to make money online favourably then you should consider learning a skill related to the type of income you are interested to have.

 

[Etini]

And to be truly rich, you must have at least two of the different types of income. If you have three of them, your life is completely guaranteed. Most people have just an active income and I dare say that it is not enough. Passive income or residual income is important for a person to have. There are times when your active income source has challenges and your passive income has to bail you out.

I have lived as a practical example of this. There are times when my poultry farm has challenges and I can't sell for the time being. My writing side jobs step in to sustain me. When my main source kicks back, I revert to saving my passive income. You would find it easier to save if you have a passive source of income. It is important for everyone to have at least two types of income.