Active Income and Passive Income – What Are They Really?
We always hear from people especially those who have network marketing business about active income and passive income. They say that passive income is the way to live and enjoy your life. And if your source of income is active income, you are doomed to slavery in all your life.
Most of us were taught and being taught by our parents, our friends and relatives to go to school, get good grades and find a job. This is the common source of income for most of us. We work for other people’s business, either here in our country or abroad. I myself was pretty convinced that this is the way to success.
“Active income” is a source of income where we get paid for our work. Some people call it “trading time for money” – meaning, you are paid only if you work. If you don’t work, you don’t get paid.
But although they say that we trade time for money, in reality, we are not paid because of “time” we spent to work. We are paid according to the value we create in our job. We are paid to meet the productivity we are expected why our boss hired us. If you don’t believe me, go to work tomorrow and do whatever you pleased. Sure enough, your boss will fire you.
The other type of income is called “passive income.” This source of income is where you use “leverage” – either your money or the efforts of other people. So it is either your money is working for you (passive investment income), or other people working for you (passive business income.) The only way to become financially free is when your passive income can pay for the lifestyle of your choice, even without working.
The only way to become financially free is when your passive income can pay for the lifestyle of your choice, even without working.
Click the photo to download a FREE copy of my Financial Blueprint for some ideas how I’m working for my financial freedom.
Leveraging your money
If your only source of income right now is only active income, don’t worry, you can become financially free. Of course, it will be more challenging, but it can be done. You see, it’s not true that if you are living on active income, you are doomed to be slave of money all your life.
Have you read my Pinoy Millionaire Game Plan already? In that article, I’ve shown you how we manage our money, and an allocation from our earnings goes to savings and investments (Passive Capital). I put my money to work for me while I continue to work on my full time job. Doing this way, we save and invest an amount in every month, and in 10-15 years, my money will be earning income much more than I can earn!
This is why it’s great to acquire knowledge how to manage your money. I wrote and share my Financial Blueprint so that you can win the money game, too.
Leveraging other people’s efforts
Creating a passive business is a good way to leverage other people’s efforts. Passive business means that the business will run without you working on it. Other people will do the work for you. Good example of these types of business are franchises, membership sites, royalties (from song, books, etc.), parking lots, apartment rentals, etc. The less people you hire to run the business, the better.
Right now, I’m building my Internet Marketing business where I will create my own information products – eBooks and video courses.
Let’s go back to network marketing. This is another type of business that you can use to create a passive income. You will earn residual income every month for the efforts of your downlines. Network Marketing is a form of business – use the product, if you like the product, you recommend to other people. I am slowly building my part time network marketing business to be one source of passive income. If I can find 5-10 people and help them become successful with their business, my network marketing business will run by itself passively as well.
Network marketing is a perfect way to duplicate yourself by teaching and sharing how the business works.
Advantage of having part time passive business
For my part who is working full time on my job, the great advantage of having part time passive business is that it will allow me to achieve my financial freedom more quickly. If you’ve watch the video about my Money Machine Project where my goal is to achieve P20M, and the time that will take me to achieve my is goal is 15 years. That’s a heck of a lot of time!
Having a part time passive business, 90% of all the income coming from it will be allotted to passive capital that will be added to my investments after taking the 10% for my “Giving and Sharing.” Simplifying our lifestyle and spend less than we make, we can live comfortably with our full time job income. If everything will work well with the passive business I’m working hard to establish, it will accelerate the build up of my Money Machine.
Reading this article, I’m pretty much sure you were able to pick up an idea that you can use to achieve your financial freedom a lot faster now than you thought before. That is, if you combine these two sources of income – active income (from your current job) and passive income (passive investment income and passive business income) at the same time. And once your passive business is earning twice as your active income, it’s about time to look into transitioning your “full time job and part time passive business” into a “full time passive business” to move forward to your financial freedom.
Download my Financial Blueprint, take action to get started!
Here’s to your success!