As you read this blog, you are already earning income, right? But what type of income? If your goal is to be financially free, you must know what income do you have now and try to make a change that will lead to be free financially. Determining what kind of income now can help you make a better decision concerning the way in which you want to make your money in order to achieve your dreams. Below are the four basic types of income. There is no right or wrong, it’s all about preference. It’s your choice. As you review them, you will be naturally drawn toward the type(s) the appeal to YOU.
1.) Earned Income. This is also referred to as linear income. This is where your income is directly proportional to your time allocated. You are paid based on your time. In other words, you’re trading your time for money. A very good example for this is your salary. You work 8 hours a day and be paid for that duration of time. Or for a business (usually service business) that required of your presence. If you don’t work, you don’t get paid.
2.) Residual income. This is the income that you gain by doing something once, and then reaping the financial profits over and over again without any further effort on your part. Example: Royalty income – a percentage of a previous sold product that has a re-occurring income like a singer, an author, a real estate property returning rental income such as apartment. Having involved in a legitimate network marketing program is another source of residual income in which you have to build a group and that group will give you percentage of their income.
3.) Leverage income. Income that you gain in combination with the combined efforts of others. If you multiply yourself, time, and money through others, you are leveraging. Thus making you a leveraged income. When this people earning money, you can also earn money. The more people under you, the more money you earn. That’s the Power of Leveraged Income. A very good example for this is being involved in MLM business.
4.) Passive income. Any time of income that doesn’t require you time (or very a little of it). Example: Investments, high interest bearing accounts, MLM business, being an affiliate member. A residual income can be also falls in this category.
Now that you already know the different types of income, what type of income do you have now?