Content

1. What is Income?

2. What is digital marketing?

3. Build a Niche Blog (or Website) and Use Affiliate Marketing

4. Launch and Grow a Startup

5. Build and Sell Software

6. Start an eCommerce Site and Sell Physical Products

7. Find Freelance Clients and Sell Your Services(Introduce 78 Freelance website)

8. Start Online Coaching and Sell Your Advice

9. Create Online Courses to Productize Your Knowledge

10. Launch a YouTube Channel to Entertain and Educate

11. Record a Podcast and Share Inspiring Stories

12. Join a Remote Company Part-Time (or Full-Time)

13. Test Websites

14. Narrate Audiobooks

15. Write and Sell an eBook (Amazon Self-Publishing)

16. Do Micro-Jobs on Amazon Mechanical Turk

17. Join Freelance Job Sites (Like Flexjobs and SolidGigs)

18. Sell Your Services on Niche Sites Like 99Designs, Cloudpeeps or TopTal

19. Do Graphic Design for Local Companies

20. Email Marketing with a Niche Newsletter (The Skimm, Mister Spoils)

21. Sells Products on a Shopify Store

22. Sell Your Crafts and Art on Etsy

23. Become an Influencer on Instagram

24. Sell Your Art and Designs on Society6

25. Local Business Consulting

26. Sell Stock Photos Online

27. Rent Your Home or Room on AirBnB

28. Start an Online T-Shirt Business

29. Sell Your Expertise on Clarity.fm

30. Answer Professional Questions on JustAnswer

31. Become a Virtual Assistant

32. Get a Commission-Only Sales Gig

33. Teach English as a Virtual Tutor

34. Guest Post as a Freelance Writer for Niche Websites

35. Write on Medium’s Partner Program

36. Help People with Their Tax Prep

37. Transcribe Audio and Interviews

38. Proofread Articles

39. Private Labelling and Selling Products on Amazon

40. Online Travel Consultant

41. Do Virtual Odd Jobs on TaskRabbit

42. Clean Up Search Engines

43. Enter Online Contests for Company Names and Slogans

44. Get Paid for Being Healthy

45. Write Reviews of the Places You’ve Been

46. Do Data Entry for Companies

47. College Admissions Essay Editor

48. Help New Teachers by Selling Your Teaching Plan

49. Give Your Opinion in Online Focus Groups and Surveys

50. Maintain Artist Fan Pages

51. Look After Other People’s Pets

52. Sell Your Old Smartphone and Other Tech Goods

53. Sell Your Old Books

54. Rent or Sell Your Clothes Online

55. Online Dating Consultant

56. Rent Your Car on Turo.

57. Become an Online News Writer or Columnist

58. Buy and Sell Domain Names

59. Do Data Analysis for Companies

60. Online Personal Trainer or Fitness Coach

61. Sell Your Songs

62. Subcontract Your Extra Work and Start an Online Agency

63. Create DIY or Cooking Videos

64. Edit Videos Online

65. Build a Niche Website

66. Become a Contract Customer Service Superstar

67. Buy an Existing Website

68. Become an Online Notary

69. Run Corporate Workshops

70. Lend Your Voice to Voice-Overs

71. Small Business Marketing Consultant

72. Rent Your Camera Gear

73. Best Apps to Make Money Fast

Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.[1][2][3]

For households and individuals, "income is the sum of all the wages, salaries, profits, interest payments, rents, and other forms of earnings received in a given period of time."[4] (also known as gross income). Net income is defined as the gross income minus taxes and other deductions (e.g., mandatory pension contributions), and is usually the basis to calculate how much income tax is owed.

1. EARNED (ACTIVE) INCOME

Definition: Earned income is money earned from working that requires your time. This is the income you receive from actively working. You work and you are paid for your work.

Examples: Salary; wages; bonuses; contract work.

Tax implications: Earned income is taxed higher than any other income, at a rate of 10%-35%, plus Medicare, Social Security, and other taxes, which can reach close to 50% based on tax calculators and estimators.

Characteristics: It’s hard to become wealthy solely from earned income for a few reasons. First, it’s taxed at the highest rate, and second, there are only so many hours in the day for you to work (you can work and work and work, but if you have to be there to make the money, there’s a cap on your income because time is limited).

Another downside besides taxes is that once you stop working, the money stops coming in.

On the upside, earned income is the easiest type of income to make. You can just go get a job or side job pretty easily in the US and make some money. This is why most people make money this way–it’s easy to do.

A great way to switch over into better types of income is to use earned income by putting it into a portfolio or to start a side hustle or business (this is what I did by starting a blog, which is now my full time business).

2. PORTFOLIO INCOME

Definition: Portfolio income is money you receive from selling an investment for more than what you paid for it (portfolio income is also referred to as capital gains).

Examples: 1) trading assets, like stocks, bonds, and mutual funds, 2) buy and selling real estate, and 3) buying and selling other assets, like a car.

Tax implications: Portfolio income is taxed at 10%-20% for investments held over 12 months and taxed as earned income if held less than 12 months. However, portfolio income is not taxed for Medicare or Social Security. Capital gains can be offset by losses on other investments, which is a huge plus.

Characteristics: One downside is that for the average person, investing can seem intimidating. This often keeps people away from doing it. It wasn’t until I became a Certified Financial Planner that I really understood what was going on with respect to portfolio income.

If you’re just getting started with investing, read this post – 21 tips for investing in your 30’s.

Also, this type of income can take a long time to generate if you believe in many of the widely held investing concepts that require buying and holding for years. If you’re a trader and attempt to do it much faster, you better be really good at it, because otherwise, it’s sort of like gambling.

You have to have money to invest upfront to create portfolio income. This is a huge reason why people say they don’t invest. You can start with a small amount and contribute to your investments over time, but it requires you to have the capital to do it.

If you want to get started with hiring someone to help you with your money, read this post on questions you should ask your financial advisor before hiring her.

I like using investing as a supplemental income strategy. I don’t want to retire, but I like the idea that I could if I ever change my mind or it became medically necessary. So, I save and invest as a bit of a safety net, but not as the end goal of retiring as soon as possible. I like contributing to the world through my work, and I also like creating a lot of income. I just don’t ever tie my “hard work” or time to income generated. This way, I know my income potential is unlimited.

3. PASSIVE INCOME

Definition: Passive income is money generated from assets you own, where you are not actively working.

Examples: Rental income, business income (as long as it’s not earned based on time and effort), creating/selling intellectual property (e.g.: books).

Tax implications: Passive income receives the most favorable tax treatment.

Characteristics: Passive income is thought to be the key to building wealth. Once you have an investment that generates recurring income, you don’t have to do much to maintain it (so time is not a limitation).

Typically, there isn’t much start up cost to passive income that you have to provide yourself. For example, you can use your time to create a business or you can get funding from investors for your real estate properties or start up company. It’s not as easy as earned income, but it’s not as challenging as portfolio income (in terms of start up funds). It takes a lot of money to make a lot of portfolio income, whereas you can generate a lot of passive income with less.

I started a blog with the idea of generating passive income (the Smart Passive Income podcast used to be on repeat!). It’s one of the best things I ever did!

A FINAL NOTE!

Understanding how income works is important because it affects how you go about deciding what results you want with money in your future.

Do you want to retire? Do you want financial independence early?

Do you want to focus on contributing to the world through your work as an entrepreneur? Do you want money just to be a scorecard of the value you provide?

Do you believe that “hard work” and time create money?

(So many questions!)

These are philosophical questions, but whatever you believe will drive your feelings, which will drive your actions, which will drive your results. So, ultimately, your beliefs drive your results (you can read more about this in the 5 step framework to master your mindset post here).

Based on what you choose to believe, you could end up financial independent and retiring very young and living off 4% of your investment portfolio, with frugal values, while traveling, and doing whatever else you want to experience the world while you’re alive. Or, you could end up a multimillionaire focusing on serving the world through your work and never retiring. Completely different results. Both involve a lot of money.

What you choose matters. What you believe about money matters. What you do matters.

The three different types of income are a way of learning how to use money to your advantage to get the results you want most.

This is the way our system works. The sooner you understand how money works, the sooner you can make better decisions that will help you achieve financial success (whatever that looks like to you).