The different types of income present in finance.
To many income is income. Its the total money we earn from rendering one service or the other or from our investments. Its important to know that there are different types of income and they are quite many. Knowing them will broaden our knowledge and also help us make plans for them. It can also give us new ideas on how to create new streams of income.
The first and most important type of income is the Earned income. This is the money we get from rendering a service or working a job. A typical example of this type of income is the basic salary or daily wages we get from working for people or in a company. This is quite common among many and its the only type most people are even familiar with.
The second and the most common is the Profit income. This is earned by business people. It is the money gained from buying and selling of goods. Its mostly gotten daily and the original cost money has to be removed first before the profit money can be derived. This type of income is also very important like the Earned income.
Interest income is the money gotten from lending others money. These are the additional money that are being paid with the loaned money. It is usually a certain percentage of the original money. This type of income is actually very nice but not as reliable as the Earned and profit income.
Rental income can be quite reliable too. This is the money Earned from renting out things like house, cars, clothes etc. Rental income can be pretty much just as Earned income especially if its on things like houses. I know a lot of people that depend largely on rental income and they are making it big.
Capital gains is a another type of income. This is the money that is being maid when an asset appreciates in value. This could be land, gold, house etc. This type of income is very reliable too and its advisable to have the source of income. Very important to invest in buying lots of asset. These type of gains can provide emergency money in cases where there are no emergency fund and money is being needed.
Finally, Royalty income. This is the money others paid to you when your idea is being used by them. It could be your art, music or video. This type of income could also be reliable if you are in that line whereby necessary protocol are being provided to ensure the payment of this Royalty income. Most of the times, people using your idea might not honor it. But in places where there is rightful protocol like galleries, these royalties can very be dependable.
I hope this post is able to open our eyes to places we don't pay attention to before and give us the motivation we need to invest in some areas. Its important to know these types of income in order to be able to plan for them very well.
Image is edited either Canva.
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Posted Using LeoFinance Beta
Posted Using LeoFinance Beta
