The 7 Different Types of Income

Mastering Personal Finance

Don’t stay in bed, unless you can make money in bed.

— George Burns

There are many different ways to make a living.

The most popular method by far is a job.

But did you know there are six other ways to receive an income?

This post looks at the difference between them and why it’s a good idea to have more than one way of making money.

The great thing about income is that it is uncapped. Unlike living costs, which you can only cut so far, there is no ceiling to how much you can earn.

1. Earned Income

The money you receive from a 9–5 is known as ‘earned’ income. This is because you ‘earn’ the money in exchange for your labour.

An earned income is often referred to as a salary. The word ‘salary’ comes from the Latin for salt because the Roman paid their soldiers in the stuff.

2. Profit Income

‘Profit’ income refers to any money left over from selling a product or service after covering your costs.

For example, if you sell a painting for £150 and it costs you £10 in painting materials, and you price your time at £25 an hour, and it takes you…