What is the meaning of passive income?
Passive income is money that you earn while having to do zero work. Zero work! Those dollars just roll into your bank account while you sit on the beach. Doesn’t that sound like a dream? However, there is a little bit more to it than that, but that is the meaning of passive income.
Usually, it requires an investment from you upfront.
This initial investment could be in the form of your time. You might have to set up and build the business before it’s able to run on its own and generate income. This would require hours from you that you aren’t getting paid. It could take you weeks or years to get the business running. An example of this is creating an online class. You would spend time putting slides together, gathering information, doing research, and making videos. This could take significant time and effort. However, once you finish building your course and put it on a course platform, you will then be able to start generating income from people who purchase your course. That initial time investment upfront now allows for your course to be sold many times over. This is the meaning of passive income!
The initial investment could also be a monetary investment. Investing in the stock market can be viewed as a type of passive income. Once you invest an initial amount of money, nothing more is usually required from you. If you are lucky, your investment will begin to earn money on its own if the economic climate is right.
Now that you understand the meaning of passive income, read here for many passive income ideas.
Who can earn passive income?
Anybody with a desire to earn passive income can earn passive income. It might take a bit of creativity depending on your resources. Do you have money, a computer, the internet, time, or an idea? Not having certain resources can definitely make it more challenging to build some passive income, but with some creativity, there are many passive income ideas out there.
I think passive income is a good idea for those who are on their journey to financial independence. It’s a way to increase your cash flow without needing your time or input.
When should you start working to earn passive income?
Now! I think the biggest thing with earning passive income is that the earlier you start building, the sooner you will begin to see returns. As we said before, it often takes an initial time or money investment upfront to begin to see returns.
Why is it so important?
Passive income is important because it’s a way to increase your cash flow without having to put in effort if you don’t want. If you’d like to retire early and work on passion projects, passive income can help fund that desire. You can travel and not have to worry about taking business calls. You can spend time with your family and not feel like you have to be doing work. That is the whole meaning of passive income.
Passive income is also important because it can help you reach your FIRE (early retirement) goals. It can help increase your cash flow passively while you still work an 8-5 job.
Now that you understand the meaning of passive income, read on