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If you’re working a 40-or-more-hour-week job, you know how frustrating it can be to feel like you’re never quite getting ahead.
Like as soon as the money comes in, it goes out straight away on bills, rent, food, expenses.
It can be challenging to get out of that cycle.
Which is why, many, many years ago, I went in search of a better way.
And I got caught in the “myth of passive income.”
I tried it all – eBay, stock market, real estate, business. And here’s what I discovered…
There Are Two Types Of Income
Active Income is income as a direct result of your efforts. You work for one hour and get paid a certain amount for that hour.
This applies to wages, salaries and work that includes professional services and consulting.
The problem with active income is, that when your work is valued at a particular rate, the amount you can earn is capped by the number of hours you can physically work.
Residual Income Is when you do the work once, and continue to get paid for it once the work is completed.
This includes income from assets like real estate or royalties from books, music or films.
Property is an asset that provides ongoing rent from the tenant to the landlord. Business is an asset that provides ongoing income to the business owner from sales.
The Passive Income Myth
Passive Income is income that just flows into your bank account with no effort.
It’s the type of income that every “get-rich-quick” scheme is telling you you’re going to get.
The thing is, there is no such thing as truly passive income.
Nothing can provide you income without having to keep an eye on it to make sure things are running smoothly.
When you own real estate, you have to check the tenant is paying rent, and there’s maintenance, and rates and neighbours to deal with.
When you play the share market, you have to track the market and make decisions about when to buy and sell.
When you own a business you need to track the numbers, the income and expenses to make sure every thing is doing what it is supposed to do.
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You Can’t Just Sit On A Beach And Watch Your Money Roll In
That’s the picture that’s painted.
And, even if you could sit on a beach for the rest of your life doing nothing, would you want to?
For most people the novelty of that would wear off after a while.
So you probably want to figure out an alternative.
Why Is Residual Income Important?
An ongoing income from multiple sources, that can be grown over time, helps provide long-term financial stability and peace of mind.
If you’re living off your active income, you’re going to be working indefinitely to keep that coming in.
Residual income provides an opportunity to increase your income over time, while working less.
Here’s what residual income creates…
01 – It Provides You With More Money And Less Stress
The first thing that residual income does is give you more money.
With more money, the stress of bills and overheads is immediately reduced.
You never have to worry about how the next bill will be paid or what happens if you can’t work.
And, you can sleep easy, knowing that saving that extra money, along with building assets to create residual income – is actually building a strong financial foundation for your future.
So you don’t have to worry about that either.
02 – It Provides You With More Time
Time is your greatest asset.
It’s something that you can’t get back.
So, every hour that you’re working in a job, just to earn money toi pay the bills, is time you can never recover. One it’s gone, it’s gone.
When you have residual income, and there’s less pressure to work to meet those monthly bills and expenses, you have more time to do other stuff, that you really enjoy, and adds even more value into your life.
It doesn’t mean you’re released from obligation, but you have more flexibility with how you spend your time.
You’re not beholden to an employer and their agenda.
03 – It Provides You With More Freedom And Choice
One you have more time and freedom, you immediately have more choice.
You always have the freedom to choose any thing, BUT…
Having money and time behind you definitely helps in the world we live in.
With money and time you get to live any where you want, travel any where you want and do any thing you want.
You get to do more of the things you love, especially if that thing that produces your residual income is something you truly love!
By being in total control of your income, you get to take a holiday, travel, create and live totally on your terms.
How To Create Residual Income
The key to creating residual income is to keep creating your Active Income and gradually build your Residual Income alongside it.
Over time, you can gradually cut back on your Active income as your Residual In come grows.
It’s going to take time, but it’s the least stressful way of doing it.
Sure, you can jump ship, and give our self all the time in the world, but without that Active money coming in at the start, it’s going to create stress and worry, and that “freedom” you just create will start to feel exactly the opposite.
So take it easy, create a plan, build it one step at a time, and have fun.
As Jim Rohn said..
“I’m working full-time on my job and part time on my fortune.
But it won’t be long before I’m working full-time on my fortune.
Can you imagine what my life will look like?”
~~ Jim Rohn
You can keep going, earning your money one hour at a time. Or, you can start to look at how you can work a lot smarter and start to build additional income streams along side.
It’s totally your choice. I’ll leave it with you.