Focus on building an active income

Who says you can't have it all without a passive income?

All through entrepreneurship classes, business courses, personal finance books and more, there is a lot of toting about two types of income:

  1. Active income: income you earn from a job or being self employed.
  2. Passive income: income you earn from a system that does not require your presence to operate (ie: business system or rent from an investment property.).
Passive income is not always as easy as it sounds and takes time to develop. 

While a lot of people focus on gaining a passive income as fast as possible, I personally recommend focusing on gaining an active income first. 

My reasoning is as follows:
  1. Active income is steady: Working in a job is a way of guaranteeing that a certain amount of money comes into your bank account each week, which you can then use to pay bills and to begin building a savings account for investing.
  2. Active income provides access to loans: If you are looking at getting a loan to start a business or to invest in property, then you will need something to secure this loan against. Banks tend to borrow against earning ability and asset security more than anything else.
  3. You can network in a job: Networking with potential business contacts and colleagues can be done while making a passive income.
  4. Active income can increase: Depending on how you invest your time as an employee, you may be able to earn a pay raise, make extra commissions or potentially even end up with a share holding in the business you work for.
  5. Work time can decrease: While this is not possible in all jobs, some jobs allow you to work remotely, whereby you can begin to improve your time management skills and productivity using various tools and techniques.
  6. Learn on the job: What better way to learn about managing a business while getting paid by someone else to do it and not losing out of your own pocket if things don't work out.
  7. Study while working: If you are a student and are working part-time, you will still have time to study, allowing you to gain further qualifications and increase your future earning potential.
  8. Start a business part time: You can start your business in your spare time while working for someone else and begin to fade out of work (via cutting back hours and pay or by telecommuting and decreasing time commitment). Starting a business part time will take a lot of energy and effort on your part, but if it doesn't work out you still have a job to fall back on.
  9. Develop royalties at work: Active and passive income? Why not! A friend of mine at university has been working for a company where he just negotiated a big deal. As a result he receives a commission of $7,500. This commission however is being paid to him at $150 a week for the next 12 months. No more work required from the sale and he is now working in another job for an entrepreneur while developing a business plan for his own concept.
There are many more benefits but the important thing is this; Active income is good. 

Passive income is great too, but ideally a mixture of both is the best. 

Even Robert Kiyosaki, Tim Ferriss, Donald Trump etc. still sell their time speaking on the lecture circuits, consulting and educating others. This requires active time investment. They just receive a little more per hour than the rest of us do in active income.

What are you doing to earn an active income? 


How could increasing your active income be of benefit to you both in the short term and in creating a passive income?

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