Here’s why you should choose an effective source of passive income early in your life.
Passive income basically consists of money that you constantly earn for which you don’t have to do a significant additional amount of work. Some examples include sales royalties, investment income, rental income, interest income, and commission income, among others.
The active income and your life
Active income, on the other hand, involves exchanging time for money directly. You must keep working to receive it. If you stop working, you stop receiving. This type of income includes wages, one-time commissions, freelance contracts, and most bonuses from work. A good way to differentiate an active income from a passive one is to ask yourself how long you expect to continue receiving that source of income this year if you stop working.
If it’s active income, that money won’t keep coming in for long, sometimes nothing. If it is a passive income, perhaps if you stop working your whole life, in several years you will still receive money. This is, as it were, an oversimplification. Most passive income is not 100% free from work. It may take a small amount of time and effort to keep the flow steady. But perfect passivity is not necessary to enjoy its benefits. Society mainly conditions us to work to earn an active income. From a young age, we are taught that the only way to “earn a living” is to get a job. But traditional jobs and jobs can become a trap because you need to work your entire life or you won’t get paid.
The retirement problem
It’s hard to have a real-life outside of work if you have to dedicate most of your days to something that gives you the money to live. And on the other hand, as you get older, it will be more and more difficult for you to carry out the jobs that pay well. Not counting the fact that most companies do not hire people over a certain age, and on the other side of the coin, some need “experienced” people. And to add salt to the wound, no one guarantees that you will have a job for a long time, your position is not yours, it can be taken from you at any time, the income you receive is not even half the value you generate, and the experience you usually get is doing new things for a couple of days and repeating them for years.
The Expected Growth
Oh yes, did we already talk about the cost of living going up all the time but wages seem not to do so at the same rate?
It is increasingly difficult to have a “good job”, but people do not want to seek alternatives because they fear they will get out of the false security that a job (even if it is bad) provides them. Now, I understand that perhaps you could seek an increase, and even decrease your costs so that the money reaches you. But the most normal thing when people start to earn a better salary is that their expenses go up immediately too.
And earning more means working more. Do you really want to try harder to stay in the same situation?
If you manage to triple or even quadruple your salary, you will be as tied up as before, or even more. Well, higher payments imply greater responsibilities. And you can’t afford to stop. Even stopping for a few days can cause a financial disaster.
You can also try building some savings. But the point is that, with active income, saving stops growing when your income stops coming. And if you stop working for a long time, guess what money you will take to survive?
So, creating a passive income is the key, stay tuned to learn more.
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