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- Income & Making Money
Passive Income Versus Active Income
Everyone needs an income to survive, but did you know that not everyone has to work for their income? I bet everyone would like to earn money without working, right? There are two types of income - passive and active. Most people (including me!) are working each day to earn an active income. Some people earn a good bit of money passively though, and I believe that is the goal for most people, at least long term, rather they realize it or not.
Whenever you work directly for a paycheck or other benefits you are actively earning an income. Almost everyone needs this type of income at some point in their lives. But if you ever want to retire you need to start earning some passive income. Passive income is when you are earning money without actively working.
I will give you examples of both active and passive income. When I do work for my employer each day I earn an active income. If I don't work I don't get paid. When I took the month of October off from writing hubs, I still generated an income through the Google Adsense program here. This required no work from me in October so it is considered a passive income.
Most people generate a passive income from investing. This can be in CDs, money market accounts, rental properties, retirement accounts, etc. If you ever want to retire, you are essentially hoping that by the time you hit 65 or 70 you will be generating enough passive income via Social Security, pensions, investment, dividends, etc. for you to live on but yet not work actively anymore. You work hard for years earning an active income in order to fund your passive income during your retirement years.
You don't have to wait for retirement to earn a passive income though. There are many other ways for you to do this. Writing for Hub Pages generates passive income for many people each month via the ad programs available on this site. If you own the royalties for something such as a book or music then once you have done the active part of that work, you will enjoy passive income from it for years to come. The internet and the blogosphere have opened up a world of opportunities for people to earn passive incomes. Get creative and start figuring out ways that you can earn money - even when you are not working.