ACTIVE INCOME VS PASSIVE INCOME VS RESIDUAL INCOME. COMPREHENSIVE APPROACH TO OVERCOMING POVERTY

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Everybody's struggles in life are how to overcome poverty and lack. That's why every day, people have to work earnestly and all of this is geared towards eliminating poverty. Our society today measures people by the amount of money they earn. A man who lacks money and other necessities of life is termed as poor and irresponsible. Therefore everything a person does should be to make money.

Making money is different from escaping poverty. Many people have made a lot of money in this life but they're still poor. This is not because of their recklessness in spending or not having a good savings culture but because they do not have the underlying knowledge of how the money they're making can catapult them from poverty to wealth. This is the crux of this write-up.

Definition of Terms:

Active income
Active income is what a person does that brings him money. Active income involves a person's active engagement in what brings him money. Many people earn daily, weekly and monthly through their knowledge, skills and talents. Many people can make lots of money via their active income and become wealthy, however, they can suddenly become poor if they are sick or incapable of working. A lot of people make this mistake of depending totally on their active incomes for payment of bills and other lifestyles forgetting that they're putting themselves at risk to make money and paraventure, they become sick, their income suffers. For example, a content creator who depends solely on the job as a means of income will suddenly become poor if he's ill.

Passive income
This is the income earned by not actively working. This is otherwise known as a side means of earning. Passive means of income do not necessarily require your presence to make money. Your presence might be needed once in a while yet the stream keeps bringing income to your account. The issue with passive income is that it is meant to augment the active income of a person and not wholly depend on it for survival.

Residual income

This is what a person does once and it keeps generating income. This source of income does not require one to do any other thing after initial investment. This however is also a passive income but the difference is that you only need to invest your money once while earning your return on investment. For example investing in stocks and others.

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The truth is that active income cannot take a person out of poverty neither do passive income or residual income. What happens is that a person must be able to engage or be involved in the three aspects of income to be able to beat poverty. To escape poverty, your source of income must be able to support each other and this will lead to an explosion of income which will in turn lead to wealth accumulation.

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