A part of your financial education is to understand the financial terms. There are different types of income. Understand the different types of income as earned income, worked income, investment income, passive income, other income.
Income puts money into your pocket. The different types of income are for different types of people with different ideas, attitude and mindset about money.
Picture: JT Foxx World’s #1 Wealth Coach, Shadeska Nicolina and George Ross for more than 40 years the right hand of Donald Trump, celebrity apprentice judge & bestselling author
Different types of income
Earned income is the salary you receive as an employee, included other income as vacation allowance and bonuses. Self employed income is the income you pay yourself as a self employer. Work income is the income you receive from your business. Investment income is the income you receive from investments.
Earned income and self employed income are active income. An employee and a self employed person have to work in order to receive income. Work income is income of big businesses. Big businesses have systems and/or employees do the work for them. Work income and investment income are passive income.
Passive income is income you have earned from assets as businesses and/or investments. Business owners and investors must not be actively involved with the business and/or the investment in order to make money.
To generate passive income most of the work is done at the beginning. In the case of a real estate you do research of the real estate, the market. Once the deal is closed you will receive passive income from the rental property.
What type of income do you have?
What type of income do you have now? What can you do to increase your income? What core value do you value the most security or freedom? Which type of person offers you the best opportunity for financial freedom, being an employee, self employed person, business owner or investor?
The core value of an employee and self employed person is security. An employee has a mindset related to security, mindset as get raise, promotion, more training to get a better job, working a lot of overtime, thinking of getting a second job.
A self employed person owns a job. Self employed persons are independent and want to do most of the time everything by themselves.
Core value of business owners and investors is financial freedom. Business owners and investors acquire assets to generate passive income. In order to become financially free you must take risks. No risk means no reward. Step out of your comfort zone and take actions that make you feel uncomfortable.
Going from financial security to financial freedom is a process of changing your thinking. It’s a process to do your best to know which thoughts are based on emotion (as fear to losing your job) and which thoughts are based on logic. Keep your emotions in check and go for what you know to be logical.
The value security is short term comfort. The value of freedom is long term comfort. What is your focus?
Business owners and investors invest their money in assets that put more money in their pockets, such as businesses, real estates, intellectual properties. Employees invest their money in liabilities that take money out of their pockets such as mortgages, consumer loans and credit card debt.
To become financially free you must generate passive income from assets. Business owners with business systems and investors are making money even while they are sleeping. You are financially free when the cash flowing in every month is higher than your living expenses.
Think for change
What is important for you in your financial life? What do you want? Make an action plan based on your values in life to take actions and close the gab of where you are now financially and where you want to go financially. The reality is that you must have a plan if you want to achieve financial freedom.
Without a plan you will never get to where you want to go financially. Set a goal to double your income over the next two or three years and then figure out how to achieve that goal. Make the decision to act today and begin taking steps toward financial freedom. Start implementing today and take daily actions to achieve your financial dreams.
For your financial success!