When you trade time for money, most people run out of money before they run out of time. That's what makes passive income so beautiful.
Money you make without labor it is called passive income. If you invest a thousand dollars in a stock, and the company sends you a dividend check for $25, that $25 is passive income.
The easiest way to get passive income is to have a generous relative – but there are other ways to crack that nut.
Passive income sources make money, involve risk, and don’t require much time. Typically, people pursue several paths concurrently, creating multiple income streams. That way, they spread risks so if one stream dries up, another is still flowing.
It takes time, risk, discipline, hard work, and study to pull it off, but the reward is worth it. My own goal was not to enjoy an opulent lifestyle but to have time with my family instead of having to go to work everyday. For me, financial independence means being with my husband and daughter.
One of these people is making money. She rents video snakes to plumbers in rural areas, and there will be money in her Pay Pal account when she gets home from the party. The rest of these people are just goofing off.
To generate passive income, you can
• Rent property or equipment
• Generate licensing fees
• Get royalties for use of creative work
• Generate web revenue through advertising
• Earn dividends and interest on investments
• Own a business that generates revenue but doesn’t
require too much of your time
Financial Independence for Beginners
The younger you are when you start, the better.
When you are young, you can afford to make mistakes. You might not have the financial resources or experience, but you have time to recover and learn from mistakes. The older you get, the more critical each decision, the fewer the options.
When you are younger, it’s easier to endure hardships older people find unbearable. In my 20’s, I installed insullation at an investment property when it was 110º outside. Now, my body just won’t let me do that. It’s not to say it’s impossible to start as an older person; it’s just easier if you start young. And of course younger people get better benefits from compounding interest, paying down debt, and appreciating assets.
You need a like minded spouse or no spouse at all.
True partners need to have the same mindset. An unsupportive spouse can be your undoing.
Focus, focus, focus
Unless you were born with a lot of resources, you'll need absolute focus to acheive financial independence. Make it your priority. Read about it, act on it. Take risks. Pocket part of the reward, and repeat. Learn from your mistakes. Share what you've learned.
Lay your infrastructure down before you have children.
Kids need a lot of time. Building financial independence takes time. Time is a limited commodity. The cost of pursuing financial independence is too high if it keeps parents away from their kids or ruins a marriage. While you can develop a strategy and put some steps in place, working around the clock with a young family defeats the purpose. If you have little ones, put time consuming financial aspirations on hold, enjoy the fleeting years, and revisit your goals when the kids are in school. Then you can figure out how to buy rental property or equipment, write a book, invest in stock, or develop another plan to generate income while you sleep. Like finding that rich uncle who thinks you're awesome.