The way I see it, there are basically 3 different types of income which people rely on depending on the choices they made and dedication to their business and careers over a period of time. They are:

1. Earned Income

Also known to many as salary. This is what most people are working for by being employees for their respective bosses in respective trade and industries.

This is what many people rely on in earning their rights to have a place to stay, food and bills to pay from month to month. 

Because you are an employee, this is actually you will be getting by working for bosses. You get paid for what your boss sees you worth as in terms of your value, time and contributions. 

Do not be fooled when you are asked to indiciate your salary expectations in job interviews. More often than not, the interviewers – who could be your future bosses or just HR personal – are testing you to see how calculative you are before deciding whether you deserve to be paid what you want.

When the economy does well, you will certainly be paid more and even get promoted. When the economy does badly, your boss will reevaluate your performance and importance to the organization before deciding whether he or she still like to keep you. 

Unless you have an alternate source of income, you are practically at the mercy of both the bosses and economy. You will also find yourself struggling to make ends meet for yourself and your family since you are working to make others rich since most of your money is spent on bills. 

2. Passive Income 

Also known as writing your own paycheck. This is what most self-employed and entrepreneurs are working for. And based on their terms and conditions in their respective businesses. 

Passive Income is generally generated from promoting products, offering services or both. Examples are insurance, network marketing, real estate and retailing, trading merchandise and wholesaling. If you have people working for you, you need not be physically present in your workplace.

The latest trend is internet marketing. Unlike the trades above, you do not need a large capital layout. You do not even need employees though you may have to invest a bit in online courses and software automation tools. Just by promoting products from online marketplaces like Amazon, Clickbank, Ebay, Paydotcom etc and you can have the potential to earn a lot of money. 

Whichever the case, the beauty of being in business is that you work for yourself and not for someone else. Your time is more flexible since you can decide when and how long you want to work. 

3. Portfolio Income

Also known as profits and dividends. This is the kind of income traders generated from their investments in paper assets. 

Like passive income, portfolio income is basically making money work for you. The money comes from paper assets such as bonds, commodities, certificates of deposits, futures, options and mutual funds and stock market. The reason they are called paper assets is because they literally revolve on paper.

Portfolio income is also where financial knowledge is of paramount importance. Your intellect interaction with creativity can either make you rich or poor.

If creating a future of financial freedom and abundance is what you want in life, check out the Secrets Of Self-Made Millionaires by Adam Khoo.