ACTIVE INCOME Meaning and
Definition
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Active income refers to the money earned from active participation in various income-generating activities or employment, where individuals actively trade their time and skills for financial compensations. It is the income derived from performing tasks or services, leading to a direct exchange of time and effort for monetary rewards. In active income, individuals are directly involved in generating revenue, and the earnings are closely linked to the individual's active involvement in the process.
Active income commonly includes wages, salaries, tips, and commissions received from employment, as well as income earned by self-employed individuals or business owners who actively participate in their business operations. This type of income typically requires consistent effort, and its receipt often ceases when the individual stops actively participating in the income-generating activity.
Active income is characterized by its dependency on active involvement and the requirement of the individual to continually work and generate income. Unlike passive income, which is earned with minimal effort or ongoing involvement, active income necessitates continuous engagement, such as rendering services, performing tasks, or trading skills on an ongoing basis.
Understanding how to generate active income is crucial for financial planning and personal financial management since active income forms the primary source of livelihood for many individuals. It is, therefore, important to diversify income sources and explore opportunities for passive income generation in order to build wealth and achieve financial independence.
Etymology of ACTIVE INCOME
The word "active" originated from the Latin word "activus", which means "doing" or "performing". It is derived from the verb "agere", meaning "to do" or "to act". In the context of income, "active" refers to earnings generated from active engagement in work or business activities.
The term "income" derives from the Latin word "incomēs", which is a combination of the prefix "in-" (meaning "into") and "comēs" (meaning "what comes or enters"). It refers to money or any other form of payment received for goods provided, services rendered, or work performed.
The phrase "active income" combines these two terms, describing the type of revenue that is earned directly from one's active involvement in work, such as salary, wages, or self-employment earnings.
