What is passive income vs linear income?

1. Linear income: Definition

What is linear income?

Linear income is that income that we receive in exchange for the time we use to obtain it. Summarizing everything in one sentence: “I need to work to have money.”

2. Passive income: Definition

What is passive income?

Passive income, also called residual income, is that income that we receive without needing to use time in return. Summing everything up in one sentence: “I don’t need to work, money works for me.”

3. Example of Linear Income vs Residual Income

Example of linear income:

In exchange for office work from Monday to Friday I receive a salary (linear income). As a condition we must spend time to earn it, otherwise we would have no income.

Passive Income Example:

The additional money I receive does not depend on the work, but I obtain it passively: rented property, stocks, copyrights, investments, franchises, etc.

4. Disadvantage of generating linear income

Well, if we are only concerned with working to generate income, we will live our whole lives enslaved to money, working to earn it. And when we cannot work anymore our quality of life will worsen, because we will not have sources of income, or they will be less than what we used to have while we are still working.

5. Benefits of generating passive income

If you have passive income, you do not work for money, but money works for you. And he is your slave 24 hours a day, 7 days a week, 365 days a year. All of this happens while you:

  • You travel and vacation enjoying life
  • You spend time with your family and loved ones
  • You study what you always wanted
  • You are the owner of your time and you dedicate it to being happy.

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Written by Lisa

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