Types of income that can change your finance

The type of income you earn either makes you rich or poor. Knowing where you earn from go a long way to put your finance in shape and determines how you spend and what you spend money on and the outcome of your spending. These are your source of income.

EARNED INCOME
This is the job you get paid your monthly salary from. Its the 9am-5pm thing, where you leave early in the morning and show up at night to get paid at the end of the month. When you earn money through a paycheck, you trade time for money. At this place, you only interested in job security i.e securing your monthly earning to meet your daily needs and any shake-up in your place of work introduces anxiety and fear. Very few take their monthly income to create wealth. You are being paid certain amount of money monthly to spend longer hours to work extremely hard for money. Often,the money is never enough to cover for all your needs and little or nothing to pay yourself and that is why you live paycheck to paycheck.To earn more, you work harder than you think.


PORTFOLIO INCOME.
This is where you trade your time for money. Its about taking certain portion of your monthly earning or from your business to buy into investment that generates more money for you through profit-taking. For example, I buy a particular stock from the banking sector for #10 from the stock market. Later, the price goes up to #25, l sell the stock, l made a profit of #15. That profit is called capital- gain.Another example, I buy a piece of land for #500,000, l sold it for #900,000 later. l made a profit of #400,000. i.e capital gain.You can keep your day job and still earn portfolio income without being stressed. With portfolio income, you work with rest of mind because you have another source of income to take care of your needs and also grow your wealth.

PASSIVE INCOME
In this place, you need to create assets that put money your pocket. These assets can pay you weekly, monthly, quarterly or yearly, enough to take care of your needs and live in abundance. Whether you work or not, these asset continue to pay you.When it puts money in your pocket, its an ASSET. When it takes money from your pocket, its a LIABILITY. For example, if you invest in dividend paying stocks that pays you dividend twice or thrice a year that is steady cashflow. Another example, if you own a rental property that pays you bi-annually or yearly that is steady cashflow. These two are called ASSETS because they appreciate.