This post is both informative about what passive income is, and it can serve to get you excited about the changes that are possible in your life through passive income.
In school, it is a common practice in some classes to ask students what the American Dream is. The American Dream for many has been a changing concept in recent decades. No longer is it enough to have a house with a fenced in front porch. People want more, but want to be able to have the freedom to enjoy it. That’s where passive income comes in. Today is about explaining what passive income is and why everyone wants to earn it. Passive income is not a quite a get rich quick type-of-thing, but a get wealthier a little at a time type-of-thing.
What is Passive Income?
We live in a busy world with too many things going on all the time. Actively investing can be hard with having such a tight schedule. That’s why a lot of people would want to build passive income streams to get money constantly working and grinding for it.
Maybe you have not heard of the term yet, and you’re wondering, “What is passive income?” There’s multiple definitions for the term. I see passive income as income earned on a regular basis without involving too much effort to make the income. Typically, it does take a lot of effort to create the income stream, but once the money is flowing it is easy to maintain with minimal work. Even the I.R.S. has a definition for passive income defines passive income. The I.R.S. defines passive income as only coming from two sources: rental activity or “trade or business activities in which you do not materially participate.”
That’s the real difference between active and passive income: effort. Most people don’t want to do hard work forever. You do have to prepare a bit before you hang up your boots, though. If you are doing something with minimal effort that continues making money for you, then you are earning passive income. However, almost nothing is totally passive, there is always a little work to be done whether you are doing it or not. For example, an individual could own a house they are renting. They still have to manage that property by repairing items that break or finding replacement tenants when the current tenants move out.
Passive income can be fun. Building your passive income is exciting and a great way to build a future for you and your family. You just have to pull the trigger.
Dividends from stock investments, affiliate marketing earnings, advertisement income from blogs/websites, revenue earned from book or eBook sales, sales from a computer programs/apps/games, rental income, social security payments, etc.
Holding a stock of Johnson & Johnson and reinvesting its dividend every year is a way to passively invest. This requires no effort besides the click of a button, and brings continued wealth for as long as you hold the shares.
Another example is to get a good deal on a house, and rent the house out. Then, hire a manager to manage the day-to-day operations of the investment. This is hands off, so it is a form of passive investment.
If you’re able to make a blogging platform that takes minimal effort, then that could even be considered a passive income stream! That is not my goal with this blog, but I am chasing currency with it.
Why Is Passive Income Popular?
We all want to make money without the work. The American Dream is not dead, it has only changed. There are still great ways to make passive income today! Someone trying to get the get the most for the least should stack passive income streams and maximize as many passive income streams as they can manage!
Truth is, if you have a family or a time-filling job, you may not have a ton of time to dedicate to earning extra money every week. Taking care of kids can take a lot of effort, and you may lose some of your time and drive to actively work or sidehustle. Don’t forget about passive investments, because they will be bringing in money when you’ve lost your extra time and can help you afford more diapers and toys.
The main desire behind passive income is being able to generate enough passive income to cover your cost of living. Reaching that goal means you have finally become financially independent! This blog is a way to take you on our journey to financial independence and for you to experience it with us and learn what it takes for you to make the money you deserve too.
Many people also see passive income as a way to break out of the income tier they are currently in as well. If you are able to stack passive income streams you could eventually multiply your salary and not even have to work to make more than you earn now! That is the hope, at least.
If you’re interested in learning about ways to earn money while you sleep, check out my other posts about passive income ideas!
This picture represents how I feel every time I wake up for work at 5:45 a.m. 🙁
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