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How’s it going today guys i hope you were having a fantastic day today we’re gonna be talking about one of the most important lessons i have ever learned and i’m ashamed to say i did not learn this lesson until i was 20 years old and i read the book known as rich dad poor dad now i’m sure you guys have heard of this book and i’m sure most of you watching these
Videos have already read that book but for those of you that have not had your eyes open to this i hope that i can be the one to share this with you as it is a very valuable life lesson what we’re going to be talking about today is the four types of income out there and the unfortunate truth is this is not something you learn in school certainly i did not learn
This in school and if you guys learn this very valuable lesson in school that i would recommend sending your teacher a card and thanking them because they really have benefited you more than you know by showing this to you early on but the unfortunate truth is if you go out there and you talk to most middle schoolers or even high schoolers and ask them how do you
Make money most of them are going to respond by saying well you go out and you get a job and the truth is there are different ways out there that you can make money and my goal with this video is to show them to you and then ask you at the end what type of income seems most appealing to you what type of income should you be looking to earn but let’s go ahead and
Start out with the most popular way people earn income and that is to earned income all right so earned income is a direct result of your labor this is going to be the job you have or if you’re a business owner it is going to be the income from your business now what i call earned income is impatient income and this is going to make more sense when we talk about
Passive income which in my opinion is a much more appealing form of income the reason i call this impatient income is because you’re going to be getting paid for the hours you work at the end of the week so every hour that you work you’re going to get paid and if you own your own business you may not even be getting paid for those hours but hopefully if you own your
Own business your goal is to eventually turn that into a passive income source or a very significant source of earned income that is significantly higher than what you earn working a job where you’re paid hourly or paid a salary now this is impatient income because you want rewards today you want the money now you want the money at the end of the week you’re not
Willing to put work in now with little to no come coming in for a much greater return going forward you want your money now and that is why i see this as a very impatient form of income now there are a number of problems with relying on earned income for your source of income first of all it’s going to get harder as you age especially if you work in a job where
You’re doing manual labor if you’re laying bricks or you’re an electrician or you’re working outside as you get older your body is going to deteriorate and it’s going to be harder for you to actually do that job but the problem is this type of income stops when you stop working as soon as you’re off the clock at five o’clock for those next 16 hours you’re not making
Any money at all you only make money when you’re at that job and actually putting in that direct labor to earn that income and the other problem is that this type of income is only scaleable with your time so if you’re working 40 hours a week and you say i want to make more money and you’re only looking at earned income the only way you can earn more money is by
Putting more hours in now you’re gonna have to work 50 hours a week or 60 hours a week and i don’t know about you guys but i have no desire to be working 50 or 60 hours a week if i’m looking to make earned income now if i’m working 50 or 60 hours a week on something that is going to pay me passive income that is an entirely different story i would be very happy to
Do that but most people only make earned income and this is where they run into trouble so the next category of income is what i really focus on with this channel and that is investment income this is when you take a percentage of your earned income from your job or your business and you put that money to work in rich dad poor dad they talk about making your money
Work for you at this point where money becomes your employee now there are a number of different ways you guys can do this i talked about this a lot in my channel primarily through investing in the stock market you could also invest in bonds maybe you want to invest in crypto currencies i would say be careful but still that might work for you but the main goal here
Is to take your money not spend it all but direct a percentage of it into assets that are going to appreciate in time or those assets are going to pay you going forward if you put your money into dividend stocks you’re going to get those regular cash payments every quarter and you can reinvest those dividends or you may at some point decide to live off of those
Dividends what you’re doing is allowing your money to grow into more money and essentially planting your in the ground and growing a money tree now is this gonna make you rich overnight absolutely not but if you start this when you’re young by the time you’re older and it’s harder for you to go to your job and make earned income you’ll have enough income built
Up from your investment income that you’re not going to have to worry about making that earned income anymore now the next category of income is one that i think is going to be most appealing to people it’s certainly most appealing to me and that is earning passive income now passive income is known as low to no effort income if it’s purely passive income it is no
Effort income you’re putting in zero hours a week and every single week those checks are coming in now if it’s low effort income than it is mostly passive income and slightly active income but eventually your goal is to make that be a completely passive income source for yourself and your family so what is great about passive income is the fact that it continues
To come in when you stop working if you decide to take a vacation or if all of a sudden you get sick and you’re in bed you’re going to continue to make money now myself i earn a good amount of passive income due to my line of work i make youtube videos and what i do is i put in all the work early on it’s a lot of work to make youtube videos and start up a youtube
Channel and build an audience online but now that i’ve been doing it for a year and a half i can reap the benefits a couple of weeks ago i had three wisdom teeth pulled out and i was down and out for like four days but all four of those days i continued to earn income from the work i had done previously and that is why what i do is a form of passive income now of
Course i still have to make videos like this and making a youtube video is active income but the goal is that this video will continue to earn me money going forward after i am done putting effort into it so a few examples of passive income a main one for people is real estate and again real estate is not passive at first it is going to be very active but the idea
Is once you own enough real estate you can pay someone to manage those properties for you and you can just sit back and collect your rent checks but early on it’s going to be a very active income source another one is youtube and again it’s going to be a very active income source early on as well as doing ebooks and courses the same thing it’s going to be very
Active it takes a lot of time to produce an e-book or to create a course or to build a following online but once you’ve done that and put that work in early on you can reap the benefits from those seeds that you planted early on and then finally another example of passive income is royalties and that is a purely passive form of income so let’s say you are somebody
Who created a song that everyone fell in love with and now every time someone uses your song or placed it on the radio you’ll get a royalty check or you get your royalty checks from spotify that is purely passive income so your goal is to find out a way to earn passive income and it’s going to be different for everyone but i want you guys to start thinking about
How you can diversify away from earned income otherwise you’re going to work for every dollar you earn and it’s going to be difficult when your body starts to fail on you or you don’t want to work as hard when you get older and then finally let’s talk about inherited income this is one that most people don’t have i’ll tell you what guys i certainly don’t have any
Inherited income this is generational wealth this is a matter of chance and circumstance if you were born into a family that has generational wealth and they have millions of dollars and you never really have to work for your money well then i guess that is a benefit to you but most people do not have that i certainly do not have that and i wouldn’t want that to
Be honest with you guys if i had that generational wealth if i had that family wealth to live off of i would certainly not be working as hard as i am today i would definitely not have a youtube channel and i really am quite thankful for my very humble beginnings because it gave me an insatiable hunger for success maybe it was the fact that i was embarrassed when
I was using my mom’s food stamp cards at the grocery store or maybe it was watching my mom pawn off her jewelry to pay for rent but something clicked in my mind and i said i don’t want to have to do this i don’t want to have to go through that and i don’t want to put my family through that and i don’t ever want to be in a situation again where i have to see my
Mom do anything like this and so i know i get a little bit emotional sometimes talking about this because it’s it was a very difficult time in my life but it really did make me hungry for success and desire more for myself than than where i had started and so a lot of people who are in a bad situation you know you look at it as you know this sucks for me i wish i
Had money i wish my family had money but i would never change a thing about where i started off in life and so you know take it as a blessing because i’m sure you’re more hungry for success than somebody who has generational wealth to live off of but your goal should be to create this your goal should be to create generational wealth for your family going forward
Because maybe you don’t want your family to have to go through what you went through and the only way to do that is to get out of this quadrant get out of the earned income quadrant maybe all you’re going to do is start making investment income and that may be all you have to do or maybe you want to learn how to make passive income and build that generational wealth
And not have to work for every dollar you earn anyways guys that is all i got for this video i hope you enjoyed it let me know in the comments section below what kind of income you are earning and where you are earning it from thank you guys for watching this video and i hope you have a great rest of your day if you are interested in learning more about investing
In the stock market i’ve created a free course just for you the link is in the description below here are a few other videos you might enjoy as well
Transcribed from video
RICH GET RICHER, POOR STAY POOR… why? By Ryan Scribner
