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Alba Iulia
Thursday, August 5, 2021

8 income streams you should know about

Ways to make money and to keep your household in the black during these trying times

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Roxanne Sarthou
Roxanne Sarthou graduated from the University of the Philippines, Diliman. She is an Australian-qualified Financial Planner, Private Banker, Lending Manager and Property Investor. The information provided in this article is that of the author. Readers may get in touch with her via email on sarthou@honourbrothers.com.

It’s not easy to maintain a steady income stream during these troubled times. With the global pandemic still raging full force, and a full rollout of effective vaccines still expected to take some time, the chances of the average householder making ends meet grow slimmer with every succeeding lockdown.

A lot of people don’t know it, but there’s more than one way to make money. We’ll discuss eight different income streams you may have at your disposal, or which anyone can aspire to in order to ease financial burdens. Like older folks like to say, there’s more than one way to skin a cat!

1. Earned Income

Earned Income is the source of money that almost everyone is familiar with. You work at a job, and you get paid for it. It’s your earnings from working as a nurse, a secretary, a dental assistant, or a factory worker. If you’re in sales, your commissions also make up your Earned Income. 

2. Profit Income

Profit Income covers the earnings realised when you buy and subsequently sell particular items. It could come from a pre-loved handbag that you picked up at an Op Shop for $30, and managed to sell online for $120. Or a designer coat that you bought for $200 and eventually passed on for the same price after you used it for quite sometime. No profit there, you say? Your profit actually lies in the Free Use that you got out of the item while you owned it!

3. Interest Income

Interest Income is money that you make when you lend money out for profit. While money lending is a tricky business fraught with risk and possible complications (especially if you lend to relatives and friends), it can provide a satisfying and stable source of revenue. A shrewd lender will typically demand that the borrower put up some sort of collateral to secure the debt, exactly the way that banks do business. If the borrower doesn’t pay within the prescribed repayment period (or skips town altogether) the lender gets to keep item(s) provided as collateral.

4. Passive Income

Passive Income is usually derived from investments. If you’ve partnered with a storeowner by bankrolling the store’s inventory (in return for a share of the store’s profits), the money you receive is passive income, since the money you earn requires little or no effort on your part. 

5. Dividend Income

Dividend Income is money paid to you by a company or organisation that you’ve invested in through the purchase of shares of stock. If you have shares in blue-chip companies like The Commonwealth Bank of Australia (CBA) or Telstra, for example, you can expect to share in the company’s earnings every time it decides to pay out its shareholders from the company’s earnings.

6. Rental Income

If you own any kind of property and you’re renting it out, then you should be thoroughly familiar with Rental Income. Rental Income is the money you earn for letting others use property that you own, whether these are dwelling units, transport vehicles, or raw land used for pasture. Minus any expenses you may have incurred, of course — for maintenance, legal fees, brokers’ commissions, insurance and taxes.

7. Capital Income

Capital Income is the money you realise when an asset that you own increases in value. A typical example would be the capital growth that comes whenever your home increases in value because of market demand. Another example could be those shares of Race Oncology (ASX:RAC) that you purchased for $0.435 each in June of 2020, which are now worth $2.10 a piece.

8. Royalty Income

If you own any kind of intellectual property (a book, a patent, a recipe, formula, brand, or special process) the chances are that you probably derive Royalty Income from it. Royalty Income is money that other people pay you to make use of your ideas, concepts, or designs — anything at all that is your brainchild — that is recognised as such and protected by law.

So there, you have it!  Eight different ways to make money and to keep your household in the black during these trying times. Try and figure out how you can tap into each of these different income streams, and hopefully you can put yourself on a more stable financial footing!

(Roxanne Sarthou graduated from the University of the Philippines, Diliman. She is an Australian-qualified Financial Planner, Private Banker, Lending Manager and Property Investor).

Featured image: Melissa Walker Horn | Unsplash


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