Types of Income and How They Are Important!

Knowing the types of income is very important and can change the way you look at your life. Would you rather work 97,760 hours of your life (based on 40 hours per week from age 18 to 65) or would you rather have your money working for you so you can spend that time doing what you love to do?

There are two income types: Lineal and Passive. Each one is broken down into two classes each. First you must understand the terms lineal and passive.

With lineal income sources, your income is dependent on the work you personally perform. This work is usually difficult, strenuous, and consumes most of your energy so when you get home, you fall into the lazy stage and wait until you have to work again. Since lineal income is dependent on your effort and time, if you don't go to work, you don't get paid. If you quit working, your money quits. Lineal income is also limited based on the amount of time you have to put into it in a day or how many people you can serve at a time or each day.

With passive income sources, your income is independent from the work you do, or you only have to do the work once to receive money over and over again from your effort and time. Passive income is usually very easy to make (if you know how), less strenuous, and doesn't take much energy so you can enjoy all of the free time you have (which will be more with passive income). Since passive income is independent from the work you do, it will keep paying you even if you stop. It can also be known as residual income. With passive income, you are not limited in the number of people you can serve and your time is hardly ever a factor.

Of the two types of income, passive income is definitely the way to go if you want to become wealthy. What is great wealth if you don't have the time to enjoy it?

Learn more about the types of income and what classes of income fill the income types.