“You become financially free when your passive income exceeds your expenses.” – T. Harv Eker
I’m sure you’ve heard the term passive income before. And you might have even asked yourself, what is passive income exactly? Well…passive income is simply money that is made passively! And what does that mean?! Basically, it means that it’s money earned by doing the least amount of work with the most minimum amount of effort possible.
Unlike a job where we have to work in order to earn an income, whether you’re employed by someone or you’re self-employed, passive income comes from goods you own that generate earnings on their own. Although that might be a concept that you find difficult to understand, there are a lot of people that believe passive income is a bunch of B.S.
The Real Truth About Passive Income
Those are the people that believe that the only way to earn money is to work for it! A-days-work for a-days-pay! Even though there is some truth to that, it’s not the whole truth and they’re not getting the big picture. Then, there are those who believe that you have to have a ton of money to create passive income. And of course, they’re not understanding it either!
Now, I’m not suggesting that you don’t have to work hard. Or that it doesn’t take money to create passive income. But what I am suggesting is that you need to have a better understanding of what passive income is, where it comes from and how important it is for achieving true financial independence. Once you really understand what and where it comes from, then you can learn how to create it.
“The key to financial freedom and great wealth is a person’s ability or skill to convert earned income into passive income and/or portfolio income.” – Robert Kiyosaki
The idea of passive income can be a tricky concept to grasp. The most important thing to realize is that passive income doesn’t just happen. It’s created! Passive income can be created from a number of different sources. The most common places include, but are not limited to, the stock market, business, real estate and intellectual properties.
Each of those sources varies in how much time, effort and money is needed to create passive income from them. In the stock market you can invest in securities that generate monthly dividend payments. You can create, purchase or invest in a business that is fully operated by employees. In real estate you can purchase a rental property in which the tenants pay rental income each month.
Intellectual properties are creations that can be protected by a copyright, patent, trademark, and the like. Such as, music, books, e-books and branding for which royalties are paid for their use. Regardless of where or how the income is generated, the key is making a conscious decision to put in the effort to create it. The simplest way to start is by saving and investing the money earned from a primary job.
No matter how small or little the amount of money saved may seem, it will be the accumulation over time that will make the difference. Like a snowball effect. Start with any amount, be disciplined, be consistent, be patient and one investment will lead to another. The creation of passive income is built over time. So, the sooner you start to build it, the sooner you will achieve real financial freedom!
“If you don’t find a way to make money while you sleep, you will work until you die.” – Warren Buffett
You know what it takes to be financially independent. And you understand how generating passive income is the key to that independence. But you may not think that generating that type of income is attainable for you. The truth is that generating passive income is by no means out of reach for anyone, no matter where you are on your financial journey.
Obviously, the sooner you create and start to generate passive income the quicker you will get yourself to financial independence. But, don’t worry if you’re just getting started on your journey. Because, whether you realize it or not, you’re already laying the foundation. The fact is that the early stages of the journey require the basic building blocks for creating and generating passive income.
It’s the basis for financial well-being and it’s the only way to achieve financial freedom! Without a doubt, passive income still takes some work, particularly in the beginning. But once it’s up and running full force, it should take minimal upkeep to keep it going and to keep it growing. That doesn’t mean it can be left completely alone. It will always need regular check-ups.
In a nutshell…that’s the difference between your money working for you instead of you working for your money! When you have to work for your money, it takes every bit of your waking time and effort to generate it. But when your money is working for you, it generates money while you’re asleep. That’s the beauty of passive income and why it’s the key to financial freedom!
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