Difference between passive and nonpassive income

Have you every heard the term passive income and were puzzled about what this really means? For most of us we might have an idea of what it is. However don’t really truly understand what difference these two forms of income play in our lives. This may have just come up in general conversation or has been mentioned to you before. Here is the difference between passive and nonpassive income.

Difference between passive and nonpassive income in principal

Difference between passive and nonpassive income

Difference between passive and nonpassive income – what is passive and nonpassive income

If you have just started your career you may have heard the term of non passive income. This most likely is what you are earning now. All new comers to the full time employment market usually fall in this category of income. Non passive income usually is the creation of income through trading your time and effort for income. Thus not passive as you have to be very active in the activity in order to get more income. Non passive usually takes a lot of work to make money and has many disadvantages with regards to your life style. It can take up time which you can use for travelling, relaxing with family, going out and having fun and just enjoying your free time.

So what is passive income?

Passive income would be associated with having a system in place which allows you to earn an income with out having to be active. Meaning you do not need to work to make the money. In general passive income can be more difficult to obtain as opposed to non passive. As passive income has a more long term effect so it is substantially more beneficial than non passive income. In order to earn passive income you need some form of automation process which automates your earnings. An example of such an income stream can be an online store, which has constant visitors visiting your website buying products. In the passive vs nonpassive income battle, passive income will always prevail.

Definition of passive

Passive income can be defined as any income generated which is made without using your own time to earn the income.

What can I do to start earning passive income?

There are a number of ways to generate passive income, especially online. Online business makes it easier because the reach is just so much larger than conventional brick and mortar businesses. Many online passive income streams originate from you selling leads to either an affiliate company, online shop or other business which needs sales.

Other forms of passive income can come in the form of property investment which allows you to receive a monthly income from rental. Software as a service is another model in which you can generate passive income by selling monthly licenses for software. Really my favorite form of passive income however is from online e-commerce stores which sell products. These easily can be scale able if you have a popular or trending product. There are also a ton of platforms your can use to get your shop started in almost no time at all.

If you wish to find out more about starting a business online check out our article on the topic here.

Sources of passive income or types of passive income

If you are interest in making passive income. Here are some sources of passive income which you can try and work on.

  1. Passive income from property investment and rental income.
  2. Dividends on stock ownership. You can use stocks as a source of passive income.
  3. Online sales, by having automated online sales and delivery process you can create passive income.
  4. Automate your business activities as a source of passive income.

Here is an additional source for any more info on passive and non passive income.


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