While talking to a friend few days ago, she raised challenges on how to earn additional income which will enable her, not depend solely on her salary. It dawned on me that this is actually what most of us are facing today as responsibility and expenses keep accruing. And we do nothing about it, rather than complaining.
Once we realize that to every problem there is a solution we can free ourselves by developing other income streams. This is what is known as passive income (making money while you sleep).
What is Passive Income?
According to Wikipedia “Passive income or residual income, is income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it.”
Proponents of earning passive income tend to be boosters of a work-from-home and be-your-own-boss professional lifestyle. The type of earnings people usually associate with this are gains on stocks, interest, retirement pay, lottery winnings, online work and capital gains.
Passive income is one the major differences between the rich and the poor. Wealthy people set up many residual income streams and watch all of them generate money at the same time. The poor person is happy to have one income stream.
The beautiful part is that once your money starts rolling in, you don’t need to commit any more capital or direct effort to the business. This is the beauty of passive income.
Steps to Acquiring Passive income
We experience different financial and legal pressures daily. The political and economic environment is ever-changing, and sometimes it can be hard to keep up. Still, despite these realities, most of us are not looking for other job. We choose to do what we are doing either because, we enjoy it or we do not have other options.
Still, would life not be so much better if we also had some additional, consistent streams of income? More money is great, but the real value here is that it would take some of the pressure from us. It might free up some of our time. Even better, it would probably help us enjoy our day jobs more. I’ve personally figured out how to do exactly that, and it motivated me on a daily basis.
When most people talk about income, they’re talking about the most basic type of income. That is,
Time in = actively earned income.
This is obvious, because most of us have day jobs where we are essentially paid for time & effort. That’s the way it works.
For most of us, if you want to increase your income, you usually have to put in more time or find a job that will pay you more per hour. Thus, we spend tons of time trying to figure out how to gain a promotion, find another job that will pay us more, or rearrange our schedules so we can get some overtime.
It’s my belief that this system of increasing income is simply not efficient. Instead of focusing on how we can work more or work harder, should we not be focusing on how to leverage our time better? After all, time is our most valuable resource. What good is money, if it can not buy us time to do the things we love with the people we love?
We should be focusing more energy and time on acquiring passive income.
Now, I understand that the idea of putting more time and effort into passively generating income may sound counter-intuitive. After all, isn’t passive income supposed to be “passive” and not demanding of time or effort?
Well, the reality is that it does take both time and effort to figure out how to make passive income–at least initially. However, once that engine is running, you’ll find that your income far exceeds the time and energy you put into acquiring it.
With passive income, you are able to work smarter and possibly produce greater output (earned income). These streams of income will not just appear out of no-where. Below are ways that can help you to start acquiring some passive income? Here’s what you need to do.
Start by figuring out what’s out there. Most of us just want ideas to come out of space. We need to read to actually know what best will serve our needs. Read news papers, blogs, books, and even listen to podcasts (it counts).
Think about what might work for you and your family. Every passive income venture is not right for every person. Consider your current financial situation as well as your priorities. Also, think about how striving for financial freedom can ultimately impact your life for the better.
Talk to people about it–as many people about it as you can. Who is actually out there doing it? Who do you work with that seems like they have figured it out? How have they succeeded? Do not be afraid to ask other successful people what their secret is. Even a casual form of mentorship can be immensely valuable. But have in mind that many people will discourage you.
As my secondary school French Tutor will say “Celui qui ne risque rien n’a rein.” The comfort of your mind would not make the difference, “No risk, no return.” Don’t be afraid to go to seminars & investment meetings. Yes, some of them are cleverly disguised as sales pitches, but certain seminars are able to give you 20-30 years of experience and wisdom packed into just one or two days. They can be well worth the investment. If nothing else, they will get your gears turning.
We cannot however, deny that the old model of income works. You make more money, but at what cost? Are you willing to go on sacrificing time and energy for a little more cash? Or will you take the steps to securing your freedom, both in time and finances?
- Are you making the move to transitioning more of your income to passive?
- What steps are you taking?
In our next post, we shall be looking into, some basic passive income ideas