The ONLY 3 Sources of Income

Probably about 98% of us have a normal job.  Or as Dave Ramsey likes to say, a J-O-B.  For most of us, that’s about the extent of our income.  All the money we make is from our J-O-B.

But are there more places to make money?  How do the people living in those enormous mansions make their money?  Do they just have really, really good paying jobs?

When I was in college, I worked with my dad doing remodeling and construction.  It was enjoyable work; he never liked to get stuck in one particular line of work, so one week it was putting up siding, another was putting down tile, another was buliding a deck.  On this particular day, we were putting up drywall and listening to Dave Ramsey.  We got to talking about money, and he asked me point blank, “where does money come from?”  I didn’t have a satisfactory response, so he gave me the answer,

“Hard Work”

Which is very true.  Money does come from hard work.  But is that all?


There are actually 2 other ways to get income.  Unfortunately for most of us, we end up just pursuing that 1 single way.  We get a job.  Hopefully a good paying one, but still just a single source of income.  There are actually 3 different ways of earning money.  They are:


A Job

Portfolio Income

Passive Income


 1. A Job

A job is just what it sounds like.  Your typical 8-5 40-hour workweek.  You make a salary or an hourly rate, and don’t have to worry about the rest of the business.  You have a J-O-B.  Keeping your education current, job security, certifications, raises, stability, benefits; all these are important to you.  Unfortunately most people stop here and don’t realize there is more.

2. Portfolio Income

Some of you may have a portfolio of investments.  These are Roth IRAs, 401k’s, stocks, bonds, CDs, mutual funds, savings accounts, etc.  Basically anything that earns you money because you have money.  That sounded confusing…  What I mean is that because you have cash, you can “loan” it out to someone else – a bank, a stock broker, etc – and they’ll use it to build additional money.  You don’t have to do a thing.  All you do is have to give your money to someone and they should earn a return on it for you.  Sure there may be some risk, but earning money just because you have money is great!  Most of these returns are based on interest of some sort.

Retiring relies on this type of income.  The money you’ve put away for retirement will hopefully ballooned to the point where you can comfortably live on just the interest alone.  In other words, if you’ve managed to save up $1,000,000 by retirement and can keep it earning 8% per year, that means you’ll earn $80,000 a year without doing a thing.  More importantly, you won’t have to touch that $1,000,000 nest egg!

3. Passive Income

This is where it gets good.  I’ll make it easy and just list some examples of passive income.

Book or ebook sales, rental property income, business income, art sales… the list could go on.

The concept is that you put in a lot of effort up front.  Write a book, make sellable art (microstock photography comes to mind), buy an apartment complex or a second house and rent it out, start a business that works FOR you.  That takes effort.  That takes a lot of hard work.  But then you reap the benefits!  Sure you need to maintain a little bit, but for the most part you’re just collecting the reward for the work you’ve done.

The great part is that this income is typically very scalable.  Once you’ve done one, there’s nothing stopping you from doing another.  Once you’ve written one book, you can write a second and collect on that one too.  Once you have one rental property, there’s nothing stopping you from buying another and earning additional rent on that.  Sure at some point you may reach a cap, but it’s certainly a lot higher than most jobs out there.


I could go on about different types of portfolio and passive income, but hopefully this has at least opened your eyes to see that there’s more than just 1 way to make money!  Once I realized this, I spend less time chasing more ways to squeeze more jobs into my life, and started looking at ways to build the other two sources of income.

Also, the last 2 are really the only way to get wealthy.  At least get to what I define as wealthy…  More to come on that later.


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