Of all of the convoluted financial terms out there, income stream may be one of the most straightforward; and that’s because it’s just what it sounds like.
That said if you’re just getting started and are new to the world of personal finance, the idea of an income stream may seem a bit confusing. But don’t panic! We’re here to help.
Here’s everything you need to know about income streams and the different ways you can generate one.
What Is an Income Stream?
An income stream is the flow of money into a personal or business account. In short: it’s the money you earn. And, you can have more than one!
There are plenty of different ways to make money. No matter how many ways you earn your cash, as long as you’re receiving payments regularly, all of those methods are considered independent income streams.
Different Types of Income
As we mentioned before, there are several different ways to earn money these days. And while a regular paycheck is enough to label something an income stream, how you make that money determines what “type” of income it is.
Here is everything you need to know about a few of the most common types of income.
Earned income is the most common type of income — and, odds are, you’re already making this kind of income. If you have a job that pays you a regular paycheck, that’s your “earned income.”
Earned income is the money you earn from working for someone else.
If you earn interest income, odds are this stream only makes up a small percentage of your overall income. Interest income is the money you earn by accruing interest on something like a savings account or a certificate of deposit.
Did you ever have a lemonade stand growing up? If you did, or if you run a business in which you sell something, then you’ve already had a run-in with profit income.
Profit income is the money you earn from selling a good or service; it’s literally your profits.
If you’ve ever looked into lists of passive income ideas, you’ve probably heard someone recommend renting out property. If you happen to have a spare room or a piece of property and decide to rent it out, any money you make from that would be considered rental income. Rental income can also come from renting out objects like high-end cameras, furniture, or cars.
If you need a little more help reaching your financial goals, you may want to consider consulting a self directed IRA custodian.
It’s What You’ve Earned
Now that you know a bit more about what an income stream is and the various ways you can create one, it’s time to start exploring your options and taking control of your financial future.
Are you looking for more advice on how to earn a passive income or manage your various income streams? We’ve got you covered! Check out the rest of our blog for more helpful articles, tips, and tricks today!