It is the foundation of your personal finance, this is the money coming in , here are the types of earning income
- Hourly wages
- Tips
- Salary
- Bonuses
- Commissions
When considering a job or a career, you should also consider the lifestyle you want to live and how you will make money to afford that lifestyle, you should also consider the benefits you get.
Earning income is a foundation of your personal finances, the better your foundation the easier the rest of your finances will be, but do not just limit yourself to one source of income , if you really want to increase the money coming in then consider other multiple streams. there are several types of income you should know but i will only mention a few:
EARNED INCOME
This is the one have just talked about, usually 9-5 job, it is the most common and usually a primary source of income , earned income is limited to the skill you have and amount of time you can work in a day
PROFIT INCOME
This is when you sell a good or a service for more than what it cost you to produce, this is a business owner or entrepreneur . This kind of income is scalable and your earning potential is unlimited , but with this reward there is so much risk
INTEREST INCOME
This is when you get paid to lend out your money, example 'HIGH INTEREST SAVINGS' with this you need a lot of money to make a significant amount of interest income but the pros are , they are that risk free and its very passive.
DIVIDENT INCOME
It is the income received of being a share holder of a company, all you need is buy a share of a company that pays dividend and you will receive a dividend payout that is usually quaterly.
RENTAL INCOME
This is when you have an asset and let someone rent it for money, this can be anything from a house to your car and equipment.
CAPITAL GAINS
This is when your buying an asset and sell it for more than what you buy for, examples can be 'STOCKS OR HOUSE' this is why investing in stocks or real estate is so popular.
ROYALTY INCOME
Is an income received from allowing someone to use your property, types of royalty income can be Music, Books, Pictures, Patterns and even the use of franchise.
The more these types of income you have the more money you will make, if you happen to loose your job you would not be screwed because you have other source of income. This source of income is either 'ACTIVE OR PASSIVE'
ACTIVE INCOME - Requires you to actively perform to get paid
PASSIVE INCOME- Can make you money while you sleep
There is so much time in a day, if you really want to grow your income you will need income sources that pays more and requires less time , many of these income sources can be considered INVESTING
Investing in business that can pay you profit, investing in real estate that can pay you rental income or capital gains, investing in stock market that can pay you dividend income and also capital gains, so one of the essential to financial literacy is investing .
