The day and age that we live in is so different from what it was 10, 20 or even 40 years ago. Back then, families could live comfortably on just one salary for a family of 4. Now things have shifted and people all over the world are looking for alternative ways to make money. Whether you are starting the nursing journey, you’ve been a nurse for a while or you have no background in nursing, you’ll want to know what these are. It’s important to diversify your income streams so that you can have consistent and reliable income. Here are the 7 streams of income outside of what you have likely been taught in formal education.
#1- Active/Earned Income
Active income is income earned from actively participating in a trade or business through a job. Examples of active income include wages, salaries, tips, commissions, bonuses, and income from businesses in which there is material participation. This type of income is normally taxed at about 35-40% depending on the state. This is the kind of income that you as well as most Americans rely on to support themselves through a job.
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#2- Passive Income
Passive income is a type of income that does not require active participation from the earner to generate an income. Examples of passive income include rental income from owning real estate, royalties from owning intellectual property, and income from investments such as stocks or bonds. Passive income can provide a stable stream of income that can help you reach your financial goals.
You can also generate passive income through affiliate marketing by marketing other people’s products. Passive income can also be acquired through book sales, course sales, membership sites and more. The main differentiating factor that makes passive income passive is you do all the work up front one time, and then continue to make money from it over and over again; versus when you work a job, you have to constantly keep on working every time you make money to get paid. This would be like, your employer paying you over and over again for an 8 hour shift you did 7 years ago, that’s the power of passive income. When you learn how to generate passive income, you reduce work fatigue in the long run.
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#3- Interest Income
Interest income is money you receive from investments or loans that have accumulated interest over time. Interest income is typically earned from fixed-income investments, such as bonds, and deposit accounts, like savings accounts and certificates of deposit (CDs). The income you receive from these investments may be taxable, depending on the type of investment and your individual tax situation.
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4- Capital Gains Income
Capital gains income is the profit made from the sale of an asset that has increased in value over time. It can include profits from the sale of stocks, bonds, real estate, and other investments. Generally, the longer you hold an asset before selling it, the less capital gains tax you will owe.
#5- Royalty Income
Royalty income is income earned from the sale of intellectual property such as books, movies, music, software, and other copyrighted material. It is usually paid in the form of a percentage of each sale, and is distinct from other forms of income such as wages, salary, or profits.
Are things sounding the same? Here is a visual diagram helping to further break things down.
#6- Dividend Income
Dividend income is money earned from investments such as stocks, mutual funds, and real estate investment trusts (REITs). It is the portion of a company’s profits that is paid out to shareholders, either in the form of cash or additional shares of the company’s stock. Dividend income can be an important source of passive income and can help to diversify and grow an investment portfolio.
#7- Rental Income
Rental income is income generated from renting out a property. This can include residential rental income from a house or apartment, or commercial rental income from a store or office building. Generally, rental income is taxed in the same way as other forms of income, such as wages and investments. It is important to report all rental income to the IRS, as failure to do so may result in penalties.
BONUS!
#8- Profit Income
Profit income is the amount of money earned after subtracting all of the expenses associated with running a business. It is the total income minus the cost of goods sold, operating expenses, and taxes. It is a key indicator of a company’s financial health and can be used to measure performance over time.
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