Understanding the 4 Ways to Make Money
The Four Ways to Make Money
There are four primary ways people generate income. Understanding these income types can help you build a solid financial future and create sustainable wealth.
1. Active Income
Active income is the money you earn in exchange for your time and effort. This includes salaries, hourly wages, freelancing, and consulting. The downside is that it requires continuous work—when you stop working, the income stops.
2. Passive Income
Passive income allows you to earn money with minimal ongoing effort. Examples include rental income, dividends from investments, royalties from books or music, and affiliate marketing.
3. Scalable Business Models
Scalable income comes from business models that can grow without directly increasing costs at the same rate. This includes e-commerce, SaaS, digital products, and subscription services.
4. Leveraged Income
Leveraged income is generated by using systems, technology, or other people’s time and skills. Examples include real estate investing, franchises, and businesses that use outsourcing.
Lesson: The Four Income Types
1. Active Income: Requires direct effort, such as a salary or freelancing.
2. Passive Income: Earned with minimal effort, such as investments or royalties.
3. Scalable Business Models: Business models that grow without proportional cost increases.
4. Leveraged Income: Income from systems, automation, or other people's time.
