Income Explained

Active Income

If you currently work for somebody else and receive a salary, then your income is active.  Here’s a basic equation for you in case you’re unsure:

Trading Time + Experience + Effort = Cash

Active income is the most popular type of income.  The amount of money you earn may change but the basic principle remains the same.


Passive Income

Passive Income is the income you receive without having to actively work for it. It means that you generate money with little or no effort on your part. It’s the type of income that entrepreneurs look for as it provides them with time to focus on other endeavors and it has the potential to generate excellent monthly returns.

It can be difficult to generate a significant monthly income without having invested a substantial amount of money. The key here is to start slow and build. You’ll be surprised how much cash you can put away when you set your mind to it. Does this sound like the answer to your prayers? Great! However, as fabulous as it sounds it isn’t as easy to achieve as you might hope. It’s going to take a lot of time and effort to earn totally passively.

Let’s Get Started

There are four steps to take in creating passive income:

  • You need a business idea
  • Identify how you could turn the income from this business into passive income
  • Create/make your product
  • Market your product

As you can see, creating a passive income stream may be ideal but it is no small task. It’s also very achievable, as long as you develop or improve on your entrepreneurial skills and creativity. Passive income only really becomes passive after adequate substantial labor-intense groundwork.

How to Grow Your Creditworthiness

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credit worthiness

Your credit score is a mathematical representation that appears in a credit bureau report. This information is used to determine your credibility. The information is made up of elements like loans, overdraft, requests for new credit, outstanding debts, how you pay your bills, how much debt you have etc. This information about you is mostly used by financial institutions like banks, insurance companies, and service providers to access the likelihood of you being able to repay any credit given to you i.e your creditworthiness. Based on your credit score, you will either be accepted or rejected.

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In order to improve your creditworthiness, there are five easy things you can do;

  • Pay your bills on time
  • Avoid having too much debt
  • Try to use only 35% of any credit limit you are given
  • Avoid making too many applications for credit at the same time
  • Only take credit when you really need to and when you are genuinely sure you can repay that credit at the stipulated time.

It’s important to obtain a copy of your credit report in order to make sure there are no corrections or amendments that need to be made. This will also help you maintain a healthy line of credit.