What is Passive Income?
You may have heard the saying that time is money, which is a great capitalist idiom to make sure that you aren’t wasting time being unproductive when you could be making money. But what about the opposite? Money is time. Which means that in order to make money, you need to invest time. And time is a commodity you can never get back. Time is our most precious resource. It allows us the ability to do the things we love that bring us joy. Most people want to make money so that they have more free time. But that’s the conundrum because making money uses up time. Henry David Thoreau famously wrote in Walden regarding cost and value, “The price of anything is the amount of life you exchange for it.”
You can work hard and hope to one day retire to a life of leisure. You can spend less and work less and live a life of leisure with less stuff. And/or, if you can figure it out, you can earn passive income, which is basically a stream of income that doesn’t cost you a lot of time.
The definition of passive income is earnings derived from sources or activities that require minimal ongoing effort or active participation after the initial setup. As an advocate of the slow living lifestyle, passive income is of great interest to me. Just the word passive gives off a certain vibe. You might imagine streams of money flowing towards you as you sit back and leisurely sip a cup of coffee or read a book or play with your kids
Why Do You Need Passive Income?
A great thing about passive income is that it allows you to make money on the side without burning out. You can keep your day job. With the economy as such, multiple streams of income are more important than ever. If you lose your job to AI or outsourcing, or if your company fails to keep up with recent tech advances and their stock plummets and they lay off 20% of their employees, you have something at least to float you for a while or subsidize your severance package while you look for more work or give up on the idea of working all together and buy an off grid home and grow all your own food.
Throughout my adult life, I have had multiple income streams. I’ve never been the kind of person to have one full-time job. I usually work freelance or as a contractor. Because of this, I usually turned my hobbies into some kind of income generator. That doesn’t mean you have to capitalize on your hobbies. It’s nice to have some things that are just for you. But it does mean that you can. Some ways that I have received passive income include digital courses, resale, Airbnb, merch at local shops, books in print and online, crypto and my Roth IRA.
Basically, life is short. The whole point is to have more time to enjoy life, so pick something that you enjoy doing and see how you can make money from it on the side. Creating a new income source that stresses you out or you agonize over doing, is not worth it and is counter effective.
If you want to dive deeper into ways to make passive income, I have compiled an in-depth list for paid subscribers of 10 ways to make passive income based on research, 30+ years of adult life experience, and creative ingenuity. In this list I have included type of person who might enjoy this form of passive income, if you need a lot or a little investment upfront, if the return is minimal or high, and whether you need to invest minimal, mild, or mucho time to do it. Hopefully, this will help you determine which one or more is best for you.
Let’s dig in.
