Passive Income: Creating Opportunities to Improve Your Life

When it comes to income, people typically think of actively working for their money through a job. This type of income is known as active income, which is income received from trading working hours for a salary, wages, tips, and/or commissions. However, there are only so many hours a person can work for their money. But, what if your money worked for you? The opposite of active income is passive income. 

With passive income, you continue to make money, even when you are not working. The opportunity is nearly endless with passive income as you can continue to grow your income without necessarily increasing your working hours. Some common passive income streams include ad revenue from blog posts, investments in a company, and royalties from publishing a book. There are many benefits to keeping passive income streams, particularly in times like these where COVID-19 has taken jobs from millions of people. Passive income allows you to spend more time focusing on your passions and your personal life, while still making money. As Warren Buffett said, “If you don’t find a way to make money while you sleep, you will work until you die.”

Importance of passive income during COVID-19

Having passive income streams has benefits, particularly in the age of COVID-19. Passive income can serve as a safety blanket in case an active income stream fails. Millions of people worldwide have lost their jobs, which served as their primary forms of active income. These losses have left many of them filing for unemployment. There is a limit to how many active income streams a person can have a one time. Working multiple jobs can require a great amount of time and energy, which can negatively impact one’s performance at each job. By having passive income streams, less time and energy can be committed to making money, and the stream limit is looser. This looser commitment results in more time to spend outside of actively working a job, and more time to spend with family and help your kids in school.

Finding passive income streams that work best for you

Passive income is a great way to add to your overall income stream. However, not every passive income stream is made equal. With today’s technological advancements, the internet makes it incredibly easy to get started on creating your own passive income. Common sources of passive income include publishing a book, investing in a company, writing a song, and creating a blog or YouTube channel that can produce ad revenue. What’s so great about all of these is that they can be accomplished from the comfort of your own home. However, passive income streams are not one-size fits all, just like a regular job or active income stream. For instance, not everyone would be comfortable writing a song since not everyone is a musician. But that is the beauty of passive income as you can use your unique skills and/or talents to your advantage. For example, if you are a certified fitness instructor, you can create an online workout program. Creating one workout program will be a one-time project, but once you market it, people can continue to buy for years to come. In general, creating online courses for skills you have an expertise in is a great way to generate passive income. Websites such as Thinkific and Skillshare allow you to make an income from courses you develop. You can also simply use YouTube to share your knowledge or skill, as you can generate ad revenue from YouTube videos. If you have a skill for writing, you could start a blog or even write an eBook. A blog, like YouTube, can be a great way to create ad revenue. An eBook, although possibly a bit more writing intensive than running a blog, has a higher earning potential as you could make actual sales from the final product.

Personal benefits of passive income

Passive income has many benefits that can improve your personal life. Your income will increase while you do other things. This means less time working means more free time for you. You can spend more time with family and friends. Using your free time to spend time with friends shows them that you still value the friendship you have. It shows that your work is a priority but you will not sacrifice everything for it. You won’t have to be a workaholic, pushing everyone one away to achieve your goals.  Similarly, with family, having passive income means you now have more time to spend with your parents, siblings, significant other, and children. Oftentimes, only earning active income results in less time spent with family, which can make your family feel like they don’t matter to you, devaluing their importance in your life. Active income allows you to spend time with them, showing them that they still mean the world to you and work comes second to family. Earning Passive income also provides you with opportunities to learn more about yourself. As John Wooden said, “Don’t let making a living prevent you from making a life.” Throughout life, we are trying to get well paying jobs. This often means attending college and then working many hours per week. Education and working can take up a large portion of time every day so many people don’t get the chance to figure out who they are, what they like, what they don’t like, their interests, or explore in life. Having more freetime gives you the option to figure these things out and create goals outside of your job. “You have the freedom to choose because you have the freedom of time. That’s the power of passive income” You should work to live, not live to work. 

Conclusion 

With passive income, you can create value for yourself, even while you are not actively working. It is a great way to make some extra money while giving yourself more time to focus on doing what you love. What are some skills you have that you could use to create a new passive income stream? With a bit of time and research, you can use these skills to get your passive income stream(s) up and running.

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Written and edited by: Catherine Quinn, Neil McNair Jr., David Gerstenfeld, Dieondra Garner, Raaghav Seth, Jake Lieberstein, and Inesse Hanna