Money management is the process of budgeting, saving, investing, spending or otherwise overseeing the capital usage of an individual or group – Source

But the most important concern about money is the way from where it is coming to us. There are mainly three types of income we are getting money from.

 

1. Active or Earned Income:

Earned or Active income is the type of income that comes in the form of salary, wages, tips, commissions from working a job or service that requires your skill,  energy & voluble time. It doesn’t matter if you’re a salaried or hourly/daily worker, self-employed or work for someone else.

 

2. Portfolio Income:

Portfolio income is also know as Investment Income that is often called a capital gains. Any wealth that you make from selling your investment includes stocks, bonds, mutual funds, real estate, antiques etc. at a higher price which you have purchase in the past. Most people start to build their portfolio or investment income while working an earned income job.

 

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3. Passive Income:

Income that comes from any resource in which you aren’t an active participant. It may receive from renting real estate, royalties from Business & dividends from stocks you invested, an automated online business, periodic Interest payouts, affiliate marketing etc.

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