1. Active Income
-> Income acquired as a direct exchange for services rendered, wherein the services rendered are the result of physical and/or mental inputs exerted by the income recipient.
2. Passive Income
-> Income acquired without any direct physical and/or mental input exerted by the income recipient.
Active Income VS Passive Income Comparison Table:
Active Income
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Passive Income
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Questions to ponder:
- What type of Income are you generating right now?
- If currently you only have Active Income, do you intend to continually depend on your Active Income throughout your remaining life?
- Would it be harmful or beneficial if you try to develop Passive Income during the time that you still have your Active Income?
Income VS Quality of Life Comparison:
Important points from the above illustration:
-> The SIZE of the Income determines the Quality of Life for the Family.
-> The Type of Income (Active or Passive) determines how secure the Quality of Life is for the Family.
-> The Type of Income (Active or Passive) determines how secure the Quality of Life is for the Family.
Questions to ponder:
- How secure is the Quality of Life of your family?
- Is the Quality of Life of your family being supported by Active Income alone?
Income VS Effort - 3 Classes of Income Earners:
Class I -> High Effort, Low Income . . . . . . . . . . . . Active Income
Class II -> Effort = Income . . . . . . . . . . . . . . . . . . Active Income
Class III -> Low Effort, High Income . . . . . . . . . . . .Passive Income
Questions to ponder:
- Under which Class of Income Earners do you belong? Class I, Class II or Class III? (Clue: More than 90% of Filipinos belong under Class I and Class II).
- If you fall under the Class I and Class II, do you intend to remain in that category for the remainder of your life?