Income Creation

I have read my share of articles and books on personal finance and people love to talk about budgeting and being debt free but they don’t talk a lot about ideas that will get you a bigger budget to work with. 

I see 2 types of income creation, active and passive. Active income is money that you have to work for.  Passive income is money that comes to you, whether or not you take action. The issue is that you need to have money to purchase investments that create income, so I’ll start with a few words on active income.

Most people’s main source of active income is their job. That’s 40 hours a week active! My recommendation is to evaluate your career path and if it is not your passion and there’s not much upside potential, work on a plan for switching careers. You don’t have to have a high stress horrible job to make a decent living. If you are looking for a career or a place to land, I recommend the oil and gas industry because it just pays so much and has great benefits (I’m a Landman). Leave a comment if you are interesting in hearing more about job opportunities in the oil and gas industry. 

There can be other sources of active income besides your job, maybe you bartend or waitress on the side or perhaps you sell some product or have a blog of your own with advertisements. Check out my Ideas for Extra $$$. There is a variety of ways to use this extra money, see What to Do With Your Money. If your priority is creating income, you should use your excess money to invest in assets that produce passive income.

There is an element of management with passive income, but the effort is significantly less than active income. There are a variety of assets you can buy to create passive income. Here are some of the options I’ve looked into.

1 – High Interest Checking

2 – P2P (Peer-to-Peer) Lending

3 – High dividend yield stocks

4 – High dividend yield mutual funds

5 -  Bonds

6 - Annuities

7 – Real Estate

8 – Oil and gas minerals

I can understand why people get confused with finances; there are so many options and so many factors to consider about when choosing an investment! When deciding which is best for you, I keep these 9 factors in mind:

1 – Risk (specifically of losing your principal investment)

2 – Liquidity as to income stream

3 – Liquidity as to principal investment

4 – Fees

5 – Return

6 – Risk of a lower than expected return

7 – Institutional investment minimum and maximums (the specific rules that are set by the institution issuing the investment.)

8 – Effective Investment minimum and maximums (e.g. wanting to invest a certain amount to make the fee comparatively smaller, investing a larger amount to achieve diversification, availability of the investment may limit how much money you can put into it.)

9 – Effort

I planned on going through each of those options with all of these factors, but that got exhausting. So I did that only for high interest checking and P2P lending for now. Leave a comment about your experiences with any of these or something else I didn't think of! Truly I am constantly scrubbing my brain and the internet for ideas.