Active Income vs Passive Income

Many people get into debt because they believe that spending money will make them happy. Credit cards are a perfect example of this. Having access to credit makes it easy to spend, which is what most people seem to do.

In fact, a study found that over half of Americans spent more than one week in a row without making any purchases due to budget constraints.

The average person has a budget for just two days every month! It’s no wonder why so many people find themselves with less money at the end of each day than they did at the start.

It can feel like you’re constantly chasing your tail, trying to save up enough money to meet your monthly obligations.

And we all know how hard it is to stay motivated to earn money when you don’t have much left over at the end of each day.

But here's something important to remember: You're in control of your finances.

You decide whether or not to spend, where to devote your time, and how much effort to put into earning extra money. All these decisions affect what kind of lifestyle you can maintain.

This article will talk about some ways to develop an income stream that you can easily scale back or even cut out if you want to.

Difference between the two

active income passive income

What is passive income? And what are some of the things that bring in money for most people? An important distinction to make about how to achieve this goal of having steady, active income is understanding what it means to be an “active” business owner.

In comparison, someone who earns through investment or dividend income is being actively productive by investing in companies and/or products that have great rewards. They are staying busy buying and selling something, thus promoting more business growth and wealth creation for them.

I will say it again; these types of incomes are wonderful! Achieving this goal would definitely earn you a nice pay check every month. Unfortunately, they are not the best way to become rich.

Passive income is different than earning a salary with one company your whole life. It is generated from the activity of others – producing content online, sharing information via social media sites, etc. - not you. This is why it is also referred to as "work from home" income or "humblebrag income." 😉

Why is this type of income less effective

It is difficult to get fast results with passive income. The reason for this is that it takes time to generate enough revenue to make changes to your live feasible. This is like owning a restaurant where you must wait until lunch rushes hour before making any significant improvements to survive.

Examples of both

active income passive income

There are two main types of income-active or passive income and example you can see this in how most people live their lives.

We’ve all seen people who seem to have money constantly coming in, they make a fortune selling something, or receive lots of rewards for giving a talk or hosting a party.

And we also know of people who spend their time working low wage jobs with no chance of reward.

Most people fall somewhere in between. They work hard at a job they love which gives them satisfaction, but they make enough only just to survive.

With that gap being the difference between living beyond your means and having a stable life, it is important to choose which type of income is more valuable to you.

I will discuss some strategies to help you decide if investing in an online business makes sense for you.

Combine your active and passive income

active income passive income

It is impossible to have enough money to live a rich life without having at least one source of income that produces an average or better monthly gain every month.

Having such a source of income can be through products or services you sell, doing things you are good at, or owning a business. All of these strategies combine activity with investment, which makes them considered active sources of income.

The second part of this term is investment, which means spending money to improve or add to the service or product you make your income from. This could be investing in new equipment or tools, expanding your current skill set, or launching a new business venture.

These activities take time, energy, and money, but they do not yield quick results. They also may not return what you invest immediately, but over years they will. Investing is usually categorized as a passive income source because of this.

There are many ways to earn passive income, and it is totally possible to have it play a major role in your financial future.

Multiply your results

active income passive income

Many people get stuck in a job they feel obligated to stick with, pay lots of money in monthly expenses, and lack motivation to pursue their dreams because they don’t see much reward for their efforts.

It can be tricky to motivate yourself to invest in things that may not show a return right away. This is why it is so important to have an income source that you plan to run with, something you enjoy being a part of and that rewards you for investing in it.

This could be through giving presentations or teaching classes about products and services you use regularly, running your own business, or developing and promoting your creative talent.

Whatever field you choose to work in, there are always ways to create more content, promote what you already have, and position yourself as an expert. You will also need to consider how you will manage your time, develop relationships, and keep motivated.

If you want to achieve your financial goals, then you must believe in yourself and your ability to succeed and take risks. It takes courage to move forward when you're not sure what will happen, but staying in our current safety zone won't open up new opportunities for us.

Do I need both?

active income passive income

It’s such a common question that many people struggle to answer. “Do I need income or do I need savings?” Many think that having either one is enough, but not both.

Having just one of these is going to limit your opportunities. You will be missing out on lots of great experiences and opportunities in life by not having both.

You see, being rich isn’t about how much money you have, it’s about what kind of person you are and how you live your life.

By investing in yourself and living an adventurous lifestyle, you’ll find that you don’t need as much money as you might believe.

As we know, spending doesn’t cost anything, so you can always keep buying those delicious hamburgers! (Not unless you want to lose weight…)

But investing in yourself does cost something, which is time. Therefore, if you choose to only focus on saving money instead of developing your personal skills then you’re limiting yourself.

You won’t feel very wealthy even though you may have a lot of money. This is why having both financial security and personal growth is important.

It’s like having a job with paychecks and benefits while at the same time working towards achieving your dreams. Both things are needed to feel successful.

Less is more

active income passive income

Many people get obsessed with having a lot of money, owning a house with a pool, traveling all over the world, and the like.

But what if I told you that it’s possible to achieve all of these things while living in a small town surrounded by your community?

It’s possible to create passive income streams and savings that will see you through not only this life, but many more.

By investing in the right assets (more about those in a minute) you can earn enough money without doing anything beyond setting up an account and checking the box.

And don’t think that because something was once expensive that it will always be cheap. As a matter of fact, investment prices are often rising due to growing demand!

There are several types of passive income, some less common than others. But they all rely on you keeping good financial habits and incorporating simple strategies into your lifestyle.

The term ‘passive income’ comes from the word ‘parasite’. Parasites depend solely on their host for survival, which makes sense considering how wealthy some people have become thanks to the spread of their diseases.

(Not a great way to live!)

So instead of being dependent on you for their livelihood, as a parasitical person they create independent sources of revenue for yourself. A successful parasite usually picks an area of weakness they can exploit and grows strong off the scraps.

Multiply your results

active income passive income

There are two main ways to make money through investing. Direct investment in stocks or investments such as real estate, dividend paying shares etc. and passive income. This is simply making money from things that don’t require too much effort to keep coming in.

The best example of this is someone who has a business idea they are passionate about. They set up their own website or app for it and earn revenue via advertising or sales.

This way you can spend your time doing other things and still reap the benefits! Most people online these days have at least an iPhone so if you were clever with technology you could create apps or websites which offer rewards via mobile purchases (phone credit).

These are called e-commerce sites and there are many ways to profit off them. Some sell merchandise while others pay small fees to use their service. It all depends on what products and services you supply and how you structure your site/app to gain an edge over the competition.

There are plenty of free tips and tricks you can find online, just look around! The more knowledge you have, the better chance you will succeed in earning extra money.

Learn to be a good listener

active income passive income

Being able to listen is one of the most important skills you can develop as an entrepreneur. As a business owner, your time is limited, so you must learn how to prioritize who to include in your conversations and why.

As mentioned before, being a great listener gives people confidence in you. It also helps them feel comfortable with you which will help build trust and relationships that are crucial to success.

When starting out as a business person, there’s always someone more experienced than you. Find ways to include these professionals in your conversation so that they can teach you new things and share their knowledge.

By actively listening and asking smart questions, you’ll not only hone your own communication skill set, but also those of others.

About The Author

Tiara Ogabang
Tiara Joan Ogabang is a talented content writer and marketing expert, currently working for the innovative company With a passion for writing and a keen eye for detail, Tiara has quickly become an integral part of the team, helping to drive engagement and build brand awareness through her creative and engaging content.
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