Types of Income and How They Are Important!

Knowing the different types of income is very important when it comes to wealth building and can change the way you look at how you make money in 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 most of that time doing what you love to do?

I hope the answer is obvious to you! So, why aren't you there yet?

There are two income types that produce money in your life: Linear Income and Passive Income. Each one is broken down into subcategories for each type. First, you must understand the terms linear and passive and what they mean to your wealth building journey.

With linear income sources, your income is dependent on your ability and the amount of time you put into 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 linear 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 coming in. Linear 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 totally 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 perform, it will keep paying you even if you stop working. It is also 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, right?

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

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