Most people have a job, and that means they have to show up to work every day. In exchange for doing this, they get paid, either by the hour or with a monthly salary. And while many people consider this a necessary part of life, I’m here to tell you it’s not.
When you trade your time for money, you limit the amount of money you can earn. And that’s true no matter how much money you make. The key to earning passive income is to trade less of your time for more money.
Just imagine that you want to earn that NI,2,000,000.00 a year; you would have to work 3,640 hours a year. (People who work a 40-hour week “only” work 2,080 hours a year.) And all those extra hours won’t contribute to a happier life, either. Sure, you would be able to pay the bills easier and maybe send your family off on a nice vacation (You won’t be able to go—remember you’re tied to a desk 70 hours a week.)
Can you imagine? That barely leaves enough time for sleep, let alone with family, hobbies, or relaxation.
Are you getting the picture? When you trade your time for money, you quickly become entangled in a trap. You have to put in the work to earn enough money, but then you don’t have enough time to enjoy it. And if you need to earn even more money, you guessed it—you will have to work even more hours.
There is a Way Out of the Rat Race
Before you resign yourself to a life of all work and no fun, let me show you the other side of the equation. What if you had a passive income stream? It may look something like this:
Notice that all of the work done on this income stream is frontloaded. You do the work up front, and then collect the rewards for as long as people continue to buy your course. Sure, you may need to update the course occasionally, but that shouldn’t take more than a few hours.
Do you see how working less and earning more money can give you the freedom you want? It’s the mindset of the rich—they can do what they want with their lives because they have passive streams of income flowing in. In other words, they don’t work for their money: their money works for them.
Another problem with putting all of your eggs in the “job” basket is that sometimes the economy—or the company you work for—takes a hit and you could find yourself out of a job. Just ask all the people who lost their jobs in 2020 because of the covid-19 pandemic and had to stay at home doing nothing. When you only rely on one stream of income and you lose it, it means disaster — unless you have more income streams to count on.
So, what’s the answer? Multiple streams of passive income. Research shows that wealthy people have on average seven streams of income. When you have a diversified stream of income, you have a lot more options, and bumps in the road such as a corporate layoff or sluggish economy won’t affect you as much.
So, what are the seven streams of income that most millionaires have?
They are all different of course, but here are the most common. (I’ve included an extra one because I believe it’s a significant source of income for those who are willing to do it the right way.)
1. Earned Income
This is the income where you do trade your time for money. It is your job. For example, if you work for N3,000 an hour, that is your first stream of income. Obviously, this isn’t passive income, and your goal will be to eventually replace this income with your passive income streams.
But not everyone wants to give up their earned income streams of revenue. For example, you may love your job and plan to work at it until you retire. But that doesn’t mean you don’t need alternative streams of income as a safety net. Just ask any millionaire who continues to work at their job. You can bet they have other streams of income to boost their net worth.
2. Profit Income
When you start a business, you will earn a profit on the goods you sell or the services you provide. For example, if you start an online store, the sales you make—less your expenses—are your profit income. And if you run a service business such as a plumber business, the profits you earn from those calls—less your expenses, including what you pay the plumbers — are your profit.
We will talk about this is the chapter about starting a business. And for those of you who are already calling me on the carpet for including information about starting a business in a book about passive income—hold on. I’ve got a new way of looking at it that will make you see things differently.
3. Interest Income
When you lend your money to someone else, the interest you charge them is considered interest income. I have a lot to say on this increasingly easy and profitable way of earning passive income later in the book. (And no, you don’t need a lot of money to get started!)
4. Stocks and Dividend Income
Some stocks pay out dividends on a monthly or quarterly basis. Those dividends are a form of passive income. But even those stocks that don’t pay out dividends are a great source of passive income because of the magic of compound interest. I’ll explain how getting started with as little as $500 today can fund your retirement.
5. Rental Income
Don’t even get me started. I will spend a lot of time on this subject because it has proven to be so profitable for me. Most people think about renting their house, and that is a fantastic way to make passive income, but there are so many more great options. Stay tuned…
Capital Gains When you own stock in a company that is doing well, the value of your stocks increases. This increase is how many people earn passive income.
6. Royalty Income
This is another passive income stream that is near and dear to my heart. You can make a killing with royalty income. And here’s the thing: once you create a product that people want (and keep it updated), you can earn royalties from it for years to come.
That’s true whether you create eBooks, e-learning courses, music, or art.
7. Affiliates and Paid Advertising
Affiliates get a bad rap because so many people get sucked into get-rich schemes associated with them. But affiliate passive income is real. The difference between people who earn real passive income from it and those who don’t is the amount of time they put into it.
By starting a blog and using paid advertising affiliates, you can build a substantial passive income stream. Each of these passive income streams can bring money into your household with little effort from you. Yes, you will have to do some work to set them up, but after that, it’s like getting free money every month.
The great thing about all these streams of income is that you can do them part-time, and most don’t take a lot of money to get started. So, although you don’t have to be a millionaire to cash in on these profitable streams of income, you can use the same methods and strategies that they do to build wealth. And who doesn’t love that?
Start your earning passive income today. You will be glad…
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