Sunday, August 21, 2016

How The Passive Incomes of The Financially Free and The Rich Compare?

How The Passive Incomes of The Financially Free and The Richest Compare? Rich and financially free enjoy high passive income streams.
The Passive Incomes of The Rich Are Many Times Their Lifestyle Costs

Based on financial means and status, people can be classified into active income dependent, those who have earned financial freedom and the rich. If we observe carefully we can discern that the passive income streams of these three categories vastly differ. This short post, a slide literally, examines how the residual incomes of the three compare and provides insights and links to profound concepts like what is passive income, what is financial freedom and how to become rich. You will find tight correlation between ideas discussed here and those found in Robert Kiyosaki’s most popular and classic work, “Rich Dad Poor Dad”.

How the Incomes Compare

How the Annual Incomes of the Three Categories of Citizens Compare
Passive Incomes
 Active Income Dependent ($)
Financially Free          ($)
 The Rich          ($)
Sum of streams of passive income

Active, Occupational Income

Total Income

Present Lifestyle Expenses


Investment for generation of passive incomes in future

Surplus Income lying in savings account in bank yielding low interest

Following conclusions can be drawn from a study of the above table:

  1. Active, Occupational Income: The active income of the  wage earners (not financially free yet) is almost the main and only source of income. For the financially free individuals the active income constitutes a small portion of the total income. The richest individuals inspite of their riches often have large active incomes; they are not lazy.
  2. Passive Income: Passive Income of the regular wage earner is miniscule. The financially free enjoy significant passive income, that slightly exceeds their present lifestyle expenses. The rich have huge passive income streams that far exceed their lifestyle expenses.
  3. Surplus and Investment of Surplus: Common folks have small and insignificant surpluses that can be invested. The financially free fave modest investible surplus for generation of future passive incomes. The rich have and invest significant sums every year to further augment already existing high levels of residual incomes.

How to Become Rich

Becoming rich is a process involving various steps.

It is advantageous to start early. When young and strong it is better to work hard as well as smart and earn copious sums of active income, keep lifestyle costs low, avoid splurging, save and make prudent investments. These investments generate passive incomes. Once the passive incomes exceed lifestyle costs, it means one has attained financial freedom. Financial freedom is the first and major steppingstone on the path to real wealth and riches.

Suggested Further Reading:


There are three classes of public, namely the wage earner, the ones who have attained financial freedom and the rich showing vast differences in their passive income streams and investible surpluses. Keeping lifestyle costs low, investing to generate residual incomes leads to financial freedom and eventually to significant riches.