Whenever I talk about money, many of my friends are quick to remind me that, "it's not all about the money". The truth is that life is theoretically not all about money. Practically, in the real world, it's all about the money. Believe it or not!Everywhere I go, people spend the bulk of their waking hours working for money, yet they're quick to say money is not important. Without money you have no house, you have no car, you have no food, you have no medication, above all you and your kids would have no education without money. In fact, I don't know what on earth money does not affect.
We all aim to generate enough income to meet our needs. The problem is that many people know only one type of income and resign themselves to generating only that type of income. This is the case because it's the type of income many are educated to generate and it's the easiest and most convinient type of income. This type of income also happens to be the worst type of income. The question that arises here is, what is the most common and worst type of income?
Earned income is the the most common and the worst type of income. Earned income is income that is generated by working. It is salary or money made from employment. The downside of earned income is that if you're not working, you're not making any money. This means that earned income earners are condemned to working for money if they intend to have any money. Once they stop working or get fired (which is common nowadays), they make no money and they and their families suffer.
Many people consider earned income as a secured and safe type of income because no investment is required to earn it. On the contrary, I see it as the most insecure type of income because the earner has no control over it. Besides, it's taxed at a higher rate than any other type of income.
Prior to October 2008, I was trapped in the same mindset like many people and mistakenly thought earned income was the way to go. Needless to say, I was wrong.
I got involved in business on October 8 2008 and started researching on how people build wealth. I wanted to know why a sizeable minority of people become wealthy while the majority of people merely survive and live a life of struggle. I found out (among other things) that the type of income we generate determines whether we'd create long term wealth or not. Wealthy people understand that earned income would not create wealth. Hence, they build businesses that generate PASSIVE INCOME.
Passive income is money you get from your assets. For example, if you own a business that operates independently of your working for it. Once you set it up, it pays you whether you're still building it or not. Another example of an asset that can generate income is a pin ball machine. If you buy a pin ball machine, it generates income irrespective of whether you're there or not (Warren Buffet was once involved in this business).
Wealthy people invest in passive income businesses because it continues to pay them month after month long after they stop building the business. Some activities that generate passive income include:
- Multi-level or network marketing
- Rental income from real estate
- creating and selling intellectual property - books, patents, internet content etc.
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