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Home> Income Tax Guide

Extra Income

If you are interested in earning more money, getting richer, getting some easy money and becoming less dependent on your job, extra income is the way to go.

There are two sources of income.

Primary Income – The most common form of income is the money you earned by working for someone or an employer. In return, your employer provides you with money in the form of a wage or a salary, plus benefits.

Alternative Income – Money earned from sources other than your job. This could be money you earned from selling things on eBay, stock or mutual fund investment income, online business revenue and any other ways to make money.

There are two types of income.

Active Income (Earned Income) – You are working for money. The key characteristic of active income is the cost of time. You must spend time (a limited resource) to make money. If you stop spending time, the income stops as well.

Passive Income (Residual Income) – Money is working for you. This is the opposite of active income. Once you stop spending time on these income sources, the income flows don’t necessarily stop. Some passive income still needs take some time, and there are varying degree of passitivity. It is desirable to have highly passive alternative income sources.

It take time and effort to to build alternative income streams for extra money. Usually to succeed, you have to be passinate, be the expertise, be patiaitent, be committed, be persistent.

However, once you set up an income stream (particularly a passive one), you could shift your focus to other streams and the money continues to come. For example, if I have $100,000 stock that pays 5% dividend, I will will continue to receive $5000 a year even if I stop paying attention to that stock. Of cause, you need to follow the company to make sure it is viable and can pay the dividend. But it doesn't take much time and money.

7 Key Factors to Build Successful Income Streams

If you are interested in building income streams, this article is the place to start. Building multiple income streams is simple, but not easy. Based on my own experience, I feel that these are the seven key success factors:

1. Passion — Do what you love.
2. Expertise – Focus on what you are good at.
3. Patience — Don’t expect to see the desired results right away.
4. Commitment – Some ideas take more effort than others.
5. Persistence — Not everything you try will be successful, just keep trying.
6. Diversify — Don’t stop at the first thing that works, keep looking for more and different ways.
7. Little by little — Trickle of money from many streams will turn into a decent amount of money.