There are many ways you can make an income online, but when you take a closer look, you will find that they all fall under three categories:

  • Active income
  • Passive income
  • Residual income.

If you only get paid when you work, then you are missing out on the easiest ways to make an income online. To increase your income online, you need to tap into all three channels. To tap into all three channels, you need to understand them first.

There are many definitions of the terms active income, passive income and residual income depending on which country you come from or what industry you’re referring to. For the sake of clarity, here is what you need to know:

Active Income

Active Income refers to income for which services have been performed. This includes wages, tips, salaries, commissions and income from businesses in which there’s material participation. It is income that involves your time and effort, which means unless you’re working, you won’t get paid. All services, consulting and coaching programs would fall under active income.

One of the fastest ways to make an income online is to offer your services remotely. If you have skills that can be delivered remotely, this will be an easy process for you. All you have to do is list your services on freelancing sites like, and and start bidding on jobs. If you prefer a full-time job, you can search for remote jobs on sites like

Your options are endless as long as you have the skills. To increase your income using this model, you have to work longer hours. That is why it is called active income. You have to be actively working to make an income.

Passive Income

Passive Income is typically derived from business activities or investments in which you’re not actively involved. Even though you’re not actively working, you still need to make an investment to set that income in motion. This is the case with rental property income, purchasing stocks that pay out dividends, or setting up automated marketing campaigns that generate sales. Once the systems are in place, you can practically make money while you sleep, with minimal effort and supervision. However, you still have to keep an eye on the processes and make minor adjustments and tweaks once in a while.

One of the fastest ways you can make a passive income online is to sell products. With products, you are not limited to any time frame. To increase your income, you simply sell more products.

If you have no products, you can use the affiliate marketing model and promote other people’s products and services. When a sale takes place, you get a commission on the sale, even though you were not actively involved in the product creation, payment processing or fulfillment.

If you don’t know how to yet, make it your goal to become an affiliate marketing pro.

Residual Income

Residual Income refers to recurring payments that you receive long after the initial sale is made, usually in specific amounts and at regular intervals. This could include royalties from intellectual properties like books, movies, apps, games, songs and inventions, or licensing agreements that give you a percentage of specific sales even if you’re no longer involved in the process. For example, you can get commissions on affiliate programs that generate monthly membership payments. Or you can tap into multi-level systems that reward you with a percentage of the sales generated by members who joined the program under your accounts.

When you look at these definitions, you can see that residual income can be called passive income under most conditions, but the reverse is never the case. That’s why sometimes they’re used interchangeably even though they do have some differences.

To increase your income and survive the ups and downs of any job market, make sure to have a setup that generates and active income, passive income and residual income.

You can learn more about the income models and how to use them in my book Pajama Paydays, How To Make The Internet Work For You.