Three Types of Income for the Poor, Middle Class and the Rich
In our attempt to offer financial education to people we care about, we often talk of the three different types of income:
Ordinary Income - income people make from a job where time is traded for money.
Portfolio Income - income derived from Capital Gain Assets
Passive Income - income derived from Cashflow Assets
The poor tend to work for only Ordinary Income. They work hard to earn money by trading their time for money. As their expenses increase, they tend to work more hours and take on side jobs. This is called the “Rat Race” of life. It’s a tough way to live and unfortunately, most people are trapped without the knowledge or tools they need to escape the Rat Race of life.
The middle class work primarily for Portfolio Income. They spend most of their lives earning ordinary income to meet their expenses and use the excess income to purchase assets that create capital gains. They work hard to improve the value of their homes; they purchase stock market products like stocks or mutual funds and hope/pray that the value of those assets increases in value over time.
The rich focus on Passive Income. This is income that puts money in their pockets even while they sleep. They are focused on creating money rather than making money. They can still have a job but have the freedom to choose whether they get paid for their time or not.
The biggest difference between the rich and the middle and poor classes is knowledge. The rich have an unfair advantage of financial education. They have spent the time required to learn how to create money and receive an infinite return for their efforts. They have learned how to use debt to their advantage in their pursuit of financial freedom.
As we live through these turbulent times when governments are printing money at will, we all need to spend time educating ourselves on how we can turn ordinary income into passive income as quickly as possible. Inflation is quickly decreasing the power of what a dollar can buy at an alarming rate. If we choose not to educate ourselves, we will soon find ourselves searching for ways to keep what I call the “Monster of Expenses” at bay.
We are here to educate you on how to change your ordinary income into passive income! Check out our library of education at www.glenroelending.ca
Kind Regards,
John Heeney
Glenroe Lending
“We build LEGACY to create TRANQUILITY”
john@glenroelending.ca
519 808 7370
