What type of income are you working for?

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Recently, I met a lady who have work in the public service for 35 years and have retired four years ago, as a director. After her retirement, she has been working with a private firm as the head of the firm. She join the private firm, to augment her pension which will give her a reasonable paycheck at the end of the month. After four years of working, she’s tired of the work because the take home pay now cannot take her home again.

But she said unfortunately for me, I can’t stop. During her active year working as a civil servant money was not an object. It was lavish living all the way, she has the best car in her office, the wore the most expensive dress, in her house was merriment always. It spending and spending all the way for almost 35 years.

When it comes to money, a lot of people are lost. This cuts across all ramifications. Lots of people are working and don’t know the type of income they’re working for. The major money problem normally arises by the huge expense that cannot be controlled.  In this write up, we’ll be looking for the types of income and allow you to choose the type of income you intend to work for.

Types of income

Well there are many types of income, but in my opinion, this income fall under three main types. They’re:

  • Earned income or Linear income
  • Portfolio income
  • Passive income

Earned income or linear income

This is the way 90% of the populations earn their money. This type of income is the income you get paid at the end of the month for as long as you work in that organization.  In other words, this revenue is generated from work performed.

This form of income increases when the more you climb the corporate ladder. The income is often taxed, before you get paid and can be static for some time until you move another step in the corporate ladder.

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That is, if you work and you earn 20,000 naira a month, you keep making the same income until you move up the corporate ladder. This income can stop anytime when you stop working for the organization or you’re fired.

Portfolio income

When you invest in stocks, and you get dividend from it, then that dividend is said to be a portfolio income. This type of income varies on the number of shares you have and the profit the company makes at the end of each financial year.

This type of income requires you to have more control to really have enough income to take care of your expenses. For instance, when Mr. A has 1000 shares and Mr. B has 10,000 shares in XYZ Company, and that company pays 2 naira dividend, then you’ll notice that the person with more shares will go home with the more money as dividend.

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But a much and better way to get more income, you’ll need to buy stocks that help you control certain percentage of the company. You can buy 1, 3, 5, 15 or even 60% of the company and the profit will be given to you according to the percentage.

Passive income

This is the type of income that keeps on coming after you have worked ones. Places this type of money is made mostly in real estate investment.

Real estate investment comes in the form of land, rental houses, hotels where you hire them out and money keeps coming in for as long as you own it.

Passive income is the income that most rich people work for. They do that because it has minimum risk compare to other income, they have control over it and increases cashflow. The most important reason is they don’t need to work for income once it starts flowing.

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What type of money are you working for?

Now the question is, what type of income are you working for? I think it’s better to work on something that can give you control over your future income, a future where you’ll have more money and less expenses.

Looking at the three types of income, it’s the earn or linear income that have the risk, with little or no control. But the other two income type, you have an option to control your investment. Well the decision is all yours.

I only have a job

If all you have is a job, we offer the following advise, though not answers, but sure to guide you as you move in your journey.

  • First decide on the type of income you want to earn 90% of your income in the future.
  • Then look for investments that produce this income. For instance If you choose earned income, you’ll be looking for a job.
  • Then get to know the investment better and how people are investing it. Don’t go into it until you’re really convinced that you have acquired the knowledge required.
  • Then develop a workable plan that will make you set your priorities that will lead you to achieve your goals.
  • Then be discipline to follow your plans. Never allow people to distract or distort you. For instance if it is saving for an investment, then don’t allow the pressure of acquiring luxury to distract you.
  • Always believe you are working to have an income that will make you financially free and a more stable person financially.

Let me ask again, what type of income are you working for? Well the egg is in your hands. Because what you do with the egg is ultimately is the result of decision. So decide wisely.

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