In todays economic challenges and uncertainties, nothing is for sure. What seems now to be strong and stable be it an institution, an organization, a proven business or even a country may just fall apart overnight. So what does that means to an individual working, not only just to survive in the midst of such disruptions but also to thrive and do well financially?
It means we have to start throwing away old ways of doing things and embrace new approaches. Not to change is a sure way to getting into potential financial trouble. Right at the top of the list is the issue of being a single income source earner. Most people are in that situation and that is not unusual ; we are all brought up and educated that way.
There are generally two ways to make money and they are:
- Linear Income is income we receive by exchanging our time for money commonly through a job or profession. We only earn for the time that we actually work. Some of us earn a higher linear income than others. This form of income could be a Primary Source of Income (PSI) for many people and the stream of income will flow as long as we keep going to work. The moment we stop the income stops. Because we all have limited time; linear income is a work-hard income and it is always limited.
- Passive income is income that comes to us whether we go to work or we dont.
- There are two types of passive income:
- a) Residual Income which results from initial efforts of working hard one time and reaping the benefits of this work thereafter. In some cases for many years into the future. A single effort is rewarded repeatedly. If you write a book that would be residual income as would be if you sell a person a razor and wait for him to order razor blades refill.
- b) Multiplex income. These are income earned from other people’s efforts. If you have a thousand persons out there selling razor blades for you; you are earning multiplex income. The same situation exists for franchise income and licensing.