Active, Passive & Residual Income Definitions! Which Is Best?


Active Income —This type of income gives you income today, right now, this week, immediately, or sooner than later. This is helpful when you have bills to pay now and you need money. You work, you get paid, you pay your bills. You can relax. Examples of active income are a job, contract work, consultant work, etc. If you need money now, don’t wait for passive or residual income to come in. It may take longer than expected. With active income, you’re in total control. Perform some type of active income work and you’ll get paid pronto.

Passive Income — This type of comes when you least expect it. I look at passive income like money dropping out of the sky. For example, at the time of this writing, I had received a $60 payment in my PayPal account from a hosting company for a referring sale I must have made last month unbeknownst to me. Well, coincidentally, I took my mom out for lunch the same day that payment came in. The bill? $59 and change. Now, that’s what I call a free lunch!

Residual Income — For me, this is really the best income, because it comes in, on a regular basis (allowing you to pay your monthly bills), and you don’t necessarily work for it. Well, you did once! My personal goal, as yours should be, is to generate as much on-going residual income as possible. Never stop adding to it. Never stop increasing it. Residual income really frees you to do what you really want to do with your time. Spend time with friends, family, pursuing a hobby or other interest. If you had over $2,500-$5,000 in monthly residual income coming in, depending on your monthly expenses, would you need a job at that point? Probably not, or at least, you wouldn’t be worried if you lost your job that you would go without income. Your residual income would be there to help you.

About Bart Smith

Bart Smith is the author of several books, professional marketer and self-publishing consultant, a personal coach, and a dynamite, motivational speaker. A self-starting, life-affirming, renaissance man, Bart is an entrepreneur at heart, who also bakes the world's best chocolate chip cookies at He shares his insights, skills, training and knowledge here, on his training website,, and helps people make money online with his online marketing shopping cart software,

Check out some of Bart's books on business, motivation, networking, coaching, checklists, and personal development.

Books by Bart Smith, MTC Founder

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