Which is Better: Active or Passive Income?

passive income

“A man who dares to waste one hour of time has not discovered the value of life.” – Unknown

When I graduated high school, I was focused on going to a top university, graduating, and landing my dream job. I was a naive and a youth filled with hope and curiosity. At that time, with no mentor to guide me, I had no idea about the precious nature of time. Now older and wiser, I would teach my younger self to differentiate between active and passive income. 

Active Income 

Active income is the income you receive after you perform a service. In other words, you are trading your time for money. A salary, wages, commission, and tips are examples of active income.

There is nothing wrong with earning an active income. In some cases, the money can be steady and relatively reliable as long as you keep working. The moment you are unable to work, then you can encounter problems.

Passive Income 

Passive income is the income you receive when you are not actively involved. This type of income can be a bit unstable, but you can earn this income while you sleep. Rental income, selling online, affiliate marketing, interest, stock dividends, royalties, and advertisement revenue (e.g., websites, YouTube, etc.) are all examples of passive income. 

Passive income is my favorite type of income. It isn’t a get-rich-quick scheme, and will require some work up-front, but who wouldn’t like to earn money passively so they can be the master of their own time and spend it on things that truly matter in life like family.  

Which is Better?

In my life, I have earned both active and passive income. They both have pros and cons. While active income gives me peace of mind at night because it is stable and I can pay my bills on time, I tend to feel more exuberant about my passive income as it is the result of me creating something out of nothing. To me, it is akin to growing a vegetable garden — you first have to plant seeds. Then you will need to water and cultivate it. After some time, you will reap the fruits of your labor. It may take time in the beginning, but the earnings will come and grow. 

If you are having trouble picking one type of income over the over, don’t worry. You can do both. However, if you are struggling to pay your bills or meet your basic needs, I implore you to get active income. You don’t want to be stressed or depressed about money. If you have active income and desire more control over your time, delve into passive income streams. You never know. Your passive income may be able to support your entire lifestyle if you manage it properly.

Video credit: Next Level Life  | YouTube

Let us know in the comments if you earn active income, passive income, or both. 

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