Other sources of income

For most people, income means a salary. A sum that lands every month, on a fixed date.

But there are other ways to earn a living. Each has its logic, its risks, and its traps.

First source: working for yourself. Self-employed, freelance, craftsman, shopkeeper.

Here, no more fixed date. One month brings in a lot, the next almost nothing.

And above all, what comes in is not yours. Part goes to contributions, part to tax, often later.

Say a quarter goes on charges. Out of four thousand euros taken in, one thousand is already spent. Set it aside right away.

The classic trap: spending the turnover, then getting the bill a year later.

Second source: renting out a property. This is called rental income.

A home worth two hundred thousand euros, rented at eight hundred euros a month. Nine thousand six hundred euros a year. Four point eight per cent gross.

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But take off property tax, months without a tenant, repairs. Say two thousand four hundred euros a year.

That leaves three point six per cent. Before tax.

And there is the work nobody counts: finding a tenant, dealing with the boiler that breaks on a Sunday.

Third source: investment income. Dividends from shares, coupons from bonds.

One hundred thousand euros invested at, say, three per cent in dividends brings in three thousand euros a year. Two hundred and fifty a month.

It is the calmest income. But first it takes a lot of capital. And a dividend can fall, or disappear.

Fourth source: rights and royalties. A book, a song, a patent, a piece of software.

You create once, you get paid on every sale. On paper, it is the ideal income.

Say a book sold at twenty euros, with eight per cent for the author. One euro sixty per copy.

One thousand copies sold, which is already a nice success: one thousand six hundred euros. For months of work.

A few works earn enormously. Most earn almost nothing. We will come back to this.

Four sources, four profiles. Work, property, capital, creation.

None is free. Each is paid for in time, capital, or risk. Often all three.