Why Passive Income?

There are quite a few people in this world that question the importance of passive income. I constantly receive the question, “Why Passive Income?” In other words, what makes passive income so special in comparison to those that can earn a 6-figure income with their jobs each year? As you’ll see throughout this post, there is a huge difference between earned income and passive income, especially when it comes to earning potential.

Earned Income

We are all quite familiar with this type of income. Earned income is typically an hourly wage (or a salary) where the amount paid is dependant on the hours that you work. If you clock in for the day at the factory, you’ll be getting paid for your time. If not, then you won’t get paid. It’s as simple as that.

There are a wide variety of incomes within this income method. Some employees work for only $8 an hour, while others are earning hundreds of thousands of dollars each year! Either way though, they are still trading time for money, and if they’d like to earn more money, they’ll most likely have to stick around work just a little bit longer.

Passive Income

Those that work for a passive income have a completely different mindset than those that work for an earned income. Passive income earners are willing to work today for absolutely nothing, just because there’s a chance that they’ll earn consistent money in the future. In other words, they’ll be getting paid for the rest of their lives for something they did years before and haven’t touched since.

Typically, passive income starts very slowly and appears to be a waste of time. Perhaps you start a niche website that’s earning $50/month from Adsense, but your friend is using his time to work on side projects, which net him upwards of $1,000 a month. If you compare dollars to dollars, passive income looks like a joke doesn’t it? But let me tell you, that $50 is a great start and could easily grow into thousands.

Developing Money Over Time With Passive Income

That $50 is only the beginning when it comes to passive income. Once you have the website set up like you want it, you can now just let it run by itself and start another one. Suddenly, you’re earning $100 a month (2 sites). Keep repeating this process 100 times and you’re earning $5,000. Then, if you decided to lay on the beach for a year, you’d still be earning your $5,000 because it’s 100% passive. Meanwhile, your friend is still slaving away each evening so he can earn a mesely $1,000 per month. Are you starting to see how powerful passive income can be?

By using the method of passive income, one can attain great wealth. However, it’s not easy to develop, and it’s certainly not easy to have the patience to build the empire. For quite a long time, you’ll feel like you’re working for nothing, until one day, you’ll realize that your earnings are growing and you don’t even have to work to earn the money if you don’t want to!

Do you have passive income ideas? Are you willing to act on them?

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4 thoughts on “Why Passive Income?

  1. My site was born out of my love for personal finance. That’s the good part because it doesn’t feel like work. Sure, I’m excited about what it can accomplish passively, but I enjoy having my own platform to discuss various elements of personal finance. Acting away!

  2. This is where most peoples misconception lies about passive income. Many of them want it “NOW” and get impatient and give up on it before they even get started.

    Those that keep working can see the long term goal and know that they will reap the benefits in the end but it takes time and effort to do it.

    It’s like walking into a business on your first day and expecting to be the boss within hours, it’s just not going to happen. Time, hard work, and perseverance are the keys that will get you there.

    -Adam.

    1. Great point Adam. Passive income isn’t always the most popular choice because it takes time and effort before any results occur. It takes a patient person to develop a large passive income.

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