"Paisa khuda to nahi magar khuda se kam bhi nahi"
-popular belief
FInancial IQ
It is Very important to understand that the rich and the successful never work for money.They always work to build a system which generates money.Finance is an often overlooked area in the Indian educational system. With so many Indians struggling with money management issues, personal finance should be taught in our school systems at an early age. Since it is not, it is up to every person to make sure that they are properly schooled in the financial arena. If we start educating ourselves about personal finance, we’ll change the generations to come by teaching it to our kids. :
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ACTIVE INCOME
Most of us are familiar with active income. This is income that comes from our active efforts to earn money. For many of us, this includes working at some sort of a traditional job. Active income can also come from the efforts you put forth to make money with a side business, or by doing odd jobs.
The main reason active income is called “active” is due to the fact that you have to do something. Often, that something requires a significant expenditure of time or effort.
PASSIVE INCOME
On the other hand, passive income is earned when you put your money to work for you. Many also consider passive income to be income from activities that you do for a short time (the set up) but that require very little else to maintain the income flow. For example, you might spend some time putting together a web site with affiliate advertising. It requires some up front time and effort, but after a while there is no need for you to put in a great deal of time. The money flows in with very little continued effort and oversight on your part.
Passive income can also come from investments. Dividend stocks and bonds are popular income investments. You put your money in (or set up an automatic withdrawal), and you earn money from dividends or from interest. There isn’t a whole lot you have to do beyond checking every so often to determine whether your income investments are performing as you like. The money comes in, but you aren’t doing much.
Transitioning into a position where passive income provides more of your earnings is a worthy goal, since it will leave you time to do the things that you want to do. Track your income, as you track your spending, and learn what you can do to improve your cash flow.
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