I know what you’re thinking; Is this another article that’ll lead you to some survey site? Will you click through a 15 minute survey answering question after question with the promise of an extra $8 after your long, hard work? The answer? NO!!!
The honest truth here is that Passive Income is something billionaires like Warren Buffet, Elon Musk and Bill Gates are already extremely familiar with. These men (and women) understand the concept that to be wealthy, time is the true metric of success after all, time really IS money!
So what is passive income?
To truly understand the concept we must first understand the definition of ‘income’. Income is literally where you are paid by a consumer or business a previously agreed amount upon completion of certain works. Most people are paid income through their job. The typical 9-5, 40 hour work week is the foundation of the American Dream. After hours worked, you could be paid salary, hourly or commission (obviously there can be a combination as well) the amount of which is previously agreed on by you and your employer.
Your earned wages face this huge dilemma. Your earning potential is capped by the aforementioned set salary! See a problem yet? Let’s look at an example of me from when I was younger.
I used to think if I wanted to make $100,000 a year in a 40 hour work week, I’d have to make $50 an hour and this was before taxes were taken out (40 hours a week, 50 weeks worked a year factoring in two weeks vacation). Boy was I in for a rude surprise! After all, how could I possibly make $50 an hour? My parents didn’t even make that much. After working for quite a while and realizing that there was no way possible for me to make $50 an hour, I started researching ways to make more money in my free time. After all, if I could just work more hours I could make more money right? WRONG! Every single person has, at one time or another, thought exactly this same way. But there’s still another problem. There’s only 168 hours in any given week and as Tony Robbins’ mentor Jim Rohn once said “If at the end of the week they ask you what you’re doing and you reply ‘Looking for more time’ they’ll come and take you away”.
Here’s Where It Really Gets Good
It took a while of crunching the numbers over and over again for me to realize that there has to be a better way. If I can’t make $50 an hour and I can’t have more time, I’ve got to create more with my time.
The first financial book I ever read (much like many before me) was Rich Dad Poor Dad by Robert Kiyosaki. In his book, Mr. Kiyosaki talks at length as to why his biological dad (poor dad) had a great job and decent spending habits could never get ahead. His dad viewed money as simply a way to buy what they wanted. Nothing wrong with this mindset at all. Billions of people think this exact same way and have for centuries. This is exactly why they continue to stay stagnate with respect to their financial growth.
Kiyosaki’s rich dad (friend’s father, first mentor) had different ideas. Rich dad viewed money as a bunch of helpers that could be put to work to continue to earn more money. What a thought!
How It Works
Let’s say you earned $20,000. To make it simple, let’s say your bills were $10,000 and your recreational expenses totaled $5,000. After all is said in done, what do you do with that extra $5,000? Most people from the older generation would say to save your money in a bank account or savings account (or if you’re like my grandfather, hide it in the coffee mugs above the sink (pick a better spot next time, old man)). What’s the problem? The average yield on a savings account in the U.S. is currently .04% meaning after a year your $5,000 would net a $2 return. While that is $2 more than you had, it’s definitely not getting us any closer to the net profits we want!
With that same $5,000 what if we earned just 8% annually? After 1 year, your total return would be $400 bringing the total up to $5,400. I never went to college a day in my life but I’m 100% positive that $5,400 is more than $5,002.
Wrapping It Up
You can and deserve to not work as hard for your money. Financial literacy is a topic that is not well understood by the common person and this is why the common person stays where they are financially. Passive income is the vehicle to financial freedom. This has been mostly an introduction to passive income but for 14 great ideas to generate passive income, check out this link —-> http://aciterar.com/83Kw
Green to Gold Passive Income 