Lesson 2: Understanding Active Income VS Passive Income
Everybody wants to make money, but a lot of people focus in trading time for me rather than making their money work them. Trading time for money is the only thing people know on how they can earn money. Did you know that the average millionaire has at around 7 streams of income? How is that possible? Do those millionaires work 24/7? They must be workaholics! Wrong… those millionaires focus on passive income streams.
Today I want to show you to the difference between active income and passive income.
What is active income?
Active income or Vertical income occurs when you trade time for money. This can be working an hourly or salary job, being a freelancer or being self-employed.
What is passive income?
Passive income or horizontal income is income that you received without doing much effort at that time. This happens when you make your money work for you. You can even refer to it as making money while you sleep. How cool is that!
Note, some passive income streams do require long hours of work before you can reap the rewards. Which explains why not many people focus on building passive streams, sometimes laziness and conformity begins to set in.