Looking for Sources of Income?
What are the sources of income?
What are the essential elements you should know!
In this article, I will break down the notion of Sources of Income so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
Let’s dig into income and extra ways that you can make money!
Are you ready?
Let’s get started!
What Are The Sources of Income
Have you wondered what are the different sources of income?
What are the best sources of income that you can generate to become a millionaire and live financially free?
There’s no denying that having different sources of income is crucial to building wealth and net equity over time.
What are the income sources you should focus on?
How many are there?
Well, this is exactly what I will cover in this article.
There are lots of information written on this topic so I wanted to make sure that I provide you with what I consider source of income to help you succeed.
Source of Income Meaning
“Source of income” refers to different streams of income that you may generate.
For example, you can generate income from one primary income source (your job) and secondary sources of income (side hustle or investments).
Is there a magic number of how many sources of income you need to live life on your own terms, financially free, and without stress?
Some say 3, other say 5 sources of income, whereas many say 7 sources of income!
The reality is that it depends on the type of income source that you’re generating, your ability to maintain all the different income streams, and how much hard work you want to put into it.
It’s also true that the more streams of income that you can create, the faster that you can crack the millionaire mark in your life.
Types of Income
Let’s look at the different types of income that you can generate to build wealth.
There are essentially seven types of income that you can generate to make money:
- Earned income
- Business income
- Interest income
- Dividend income
- Rental income
- Capital gains
Each income source will have benefits and drawbacks that you’ll need to consider but all of them are great sources of income.
In some cases, you can become a millionaire with only one once income source.
To put all the chances on your side though, you should consider having two sources of income, perhaps a three, four, five, and so on…
Start by building one source of income and then try to move to the next, working your way up the ladder.
Different Sources of Income
What are the different streams of income that you can generate to make money?
Aside from your main source of income now, are there any other sources of income that you can tap into?
Well, there are seven of them (is that a lucky number!).
Here are the most common types of income:
- Earned income
- Business income
- Interest income
- Dividend income
- Rental income
- Capital gains
Let’s look at each of them more closely.
Earned income is the income that you earn by working on your day-to-day job (income you “earn” by working).
All individuals who trade their time for money are considered to make “earned income”.
This represents most people’s primary (and in many cases) and the single source of income in their lives.
We are all told to study hard, graduate, and find a good-paying job.
If you follow this philosophy, you are hoping to build your wealth through earned income.
Business income is a source of income that you earn by starting and owning a business.
Businesses make money by selling goods or services.
You and I both know that starting a successful business, operating it, and making good profit is not easy nor can it be achieved by all.
Some start a business and become millionaires (and even billionaires), while others lose their life savings.
In this article, I’m not focusing on the complexity or risk level of the additional income sources that you can create but telling you what they are so you can start thinking about them.
Interest income is a source of income that you make by lending money to others.
You earn interest as a fee for letting someone “use” your money.
Think about lending as you renting out your money for some time and the person borrowing your money will need to return it in full (your principal) along with a fee (interest).
There are different ways you can earn interest income like putting your money in a certificate of deposit, peer-to-peer lending, real estate crowdfunding, flipping real estate properties, purchasing government bonds, corporate bonds, or similar debt securities.
Dividend income is a source of income that you earn by owning shares in a company.
Typically, you’ll purchase the shares of a publicly-traded company paying you dividends.
Different types of stocks will provide varying levels of dividend yield.
When the company makes money, it can choose to distribute some of its profits to its shareholders as dividends.
As such, you’ll need to invest some of your money to become a shareholder in the company so you can eventually be entitled to dividend income.
Rental income is a source of income that you earn by owning a property that you can rent out for a fee.
The most common type method that you can earn a rental income is through real estate investments.
You can purchase a single-family home, multifamily apartment building, commercial office, industrial buildings, or any other type of real estate property that you can eventually rent out.
You can also rent out equipment such as tools, machinery, or other devices that people are willing to pay to borrow.
Capital gains are profits that you earn when you sell your investments.
You can invest in stocks, bonds, real estate, or other property to earn a capital gain.
When you sell something over and above what you paid for, the profit you make is your capital gains.
The most common type of capital gain that you may be aware of is profits earned by buying and selling stocks.
Royalty is a source of income that you can earn by creating something of value and letting someone else use it.
You can create music, video, software, or write a book to earn royalties by licensing your creation to others.
Today, we live in the world of technology and many companies make significant sums of money by earning royalties on products that they’ve developed.
The more creative you are and can innovate, the more you can make money through royalties.
Having Multiple Streams of Income
For many, the idea of becoming a millionaire is more a dream than a real and viable possibility for them.
However, let me tell you that anyone can become a millionaire (or at least financially comfortable) with the right mindset and great discipline.
If your idea to make lots of money is to work on your 9 to 5 job and squeeze all the pennies that you’ve got, you may never get there or you may get there way too late.
However, creating alternative sources of income or any additional sources of income over and above what you have is the most effective way to get you to your financial goals.
Think about having your money work for you to make money.
Think about earning passive income instead of trading your time for money.
Think about how to create multiple sources of income in a strategic, effective, and feasible manner to begin your journey.
The fact is, when you look at the life of most wealthy and successful individuals, they’ve earned significant sums of money through multiple streams of income such as their investments, participation in a business, dividends, real estate property ownership, and so on.
I can tell you from my personal experience (although I do not claim to be a filthy rich person), that I’ve built extra sources of income for myself to build wealth.
Now, in addition to the money I make by working on a job, I have sources of extra income helping me further develop my financial wealth.
Sources of Income Examples
What are some examples of “income sources”?
If you are looking for ideas to create an additional income source for yourself, here are some examples that I can share with you.
By the way, be sure to read my post on 51 passive income ideas where I cover the topic of how you can make money “passively” (my absolute favorite method to make substantial money over time).
There are many ways you can earn different sources of income.
The best examples I can share with you for extra income source are the ones that I have implemented personally in my life (I’ll tell you based on first-hand experience).
My favorite source of income is rental income coming from owning real estate.
If you can find yourself a nice real estate property that you can rent out, the rental income that you earn will help you build equity in the property and potentially leave some extra cash flow in your pocket every month.
The best type of real estate investment is one where the rental income allows you to pay all your monthly expenses and leave you with a residual income that you can invest elsewhere.
Another example that I can give you is to make money online.
Over the past several years, I have worked hard to build myself an online business consisting of various “sources” where I make money.
I make money through affiliate marketing, selling digital products, selling online courses, blogging, and making online videos.
It took me a long time to build these income channels but since I earn a large portion of my income passively, I can scale the business without much additional effort (relatively speaking).
There are endless ways you can complement your income sources and it would be difficult to go through all of them but here are some more examples:
- Invest in the stock market
- Invest in dividend stocks
- Invest in a business
- Invest in certificates of deposit
- Start a blog
- Start an affiliate marketing website
- Sell digital products
- Start a vending machine business
- Create a mobile app
- Flip websites
- Flip real estate properties
- Invest in real estate investment trusts
- Invest in annuities
- Peer-to-peer lending
- Sell stock photos
- Make YouTube videos
- Start a business
- Provide consulting services
Income Sources Takeaways
So, there you have it folks.
What is source of income?
How many sources of income does the average millionaire have?
What is the most common source of income?
In this article, I’ve looked at what are some sources of income so you have a better understanding of different ways you can achieve financial freedom (I hope you do).
Many of us have one source of income: our job!
However, the secret to becoming a millionaire is not necessarily to work on your daily job and save all your dollars and cents but to create income sources from multiple streams.
If you can do that successfully, you will skyrocket yourself to financial independence!
Income can be earned by trading your time for money (active income) or put your time to create something of value that others will be willing to pay you for it (active or passive income) or make your money work for you (passive income).
For millionaires, the most common source of income is investments.
That’s right, they invest in businesses, stocks, real estate, startups, you name it!
With their investments, millionaires have their money produce more money (every day, sunny or not, like clockwork…).
I hope you can take the multiple sources of income ideas that I’ve shared with you here along with an overall perspective of what are some sources of income, you can also start your journey to financial freedom.
My Book Suggestions!
If you’d like to read more on the topic of multiple sources of income and wealth, you should read Mulitple Streams of Income: How To Generate A Lifetime of Unlimited Wealth and Think & Grow Rich!
Why You Should Join My Passive Income Blog
It’s been great having you on my blog.
Just so you know a little about me!
I have a law and finance degree and I’ve been practicing as an attorney for the past fifteen years.
On this blog, I focus on generating passive income in order to build wealth.
I’m passionate about this topic and I practice what I preach.
Over the years, I have built a portfolio of passive income sources generating me a constant, continuous, and reliable source of cash flow every month (let me tell you, it is awesome!!).
I made a lot of mistakes on the way but I also learned a lot.
Now, my mission is to teach you my secrets, guide you, and show you how to make passive income for yourself.
I don’t offer a get-rick-fast scheme or I will not promise to make you a millionaire overnight.
What I can do is to provide you real and actionable strategies that you (and anyone) can implement on any scale (large or small) to make money passively.
If you are willing to dedicate yourself, work hard, and make sacrifices, I can help you change your life around.
I only focus on tried and true methods for making money and they take time, patience, perseverance, and a lot of hard work.
If you are looking for financial freedom, make more money, or learn how to earn cash flow from awesome passive income sources, as your first step, sign up for my Passive Income Newsletter.
When you sign up, I will share with you my exclusive content on passive income, tell you about the tools I use, strategies that I’ve used, what successful entrepreneurs do to make piles of money, and most importantly my actionable tips to get you started!
As a finance professional and business lawyer, I have learned a lot over the years on the job and through my own personal journey to achieve financial freedom.
Are you ready to live life on your own terms?
Can you make the commitment today?
If you are ready and willing to commit yourself, come with me and let’s go on a wonderful journey together…
With that being said, let’s head right back to our main topic!
Source of Income
If you enjoyed this article on Sources of Income, I recommend you look at our blog to learn about ways you can make money and achieve financial freedom. Enjoy!
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