I know, it’s a pretty funny title.
Does anyone really need a list of reasons why passive income is a smart thing? It’s like writing an article entitled, Reasons I Prefer Using My Dishwasher Over Hand Washing or Why I Prefer an Open Bar to a Cash Bar.
Uh, hello, Captain Obvious…!
But it’s fun to make lists. Especially when the list is all about benefits! I’ve always been a glass-half-full kinda girl.
Note: Please welcome guest blogger Meredith Allyson Dooney (the author of this post)! Meredith is a home business owner based in the Boston area. She has been working and mentoring in the network marketing space since 2011. Meredith’s mission is to help as many people as possible create freedom in their lives and experience the same increase in personal growth, integrity, purpose and abundance that she and so many others are enjoying every single day. Check her out at MeredithAllyson.com and at Facebook.com/LiveGiveAndGrow.
First, let’s define passive income. In the simplest of terms, passive income is money that continues to come in over and over again, for months — and sometimes even years — after you have expended the effort required to create it. It is passive. You do the work once, and get paid repeatedly. Rental income, royalties from books and music, income from investments, monthly membership fees — those are all forms of passive income, which is the opposite of linear income (wages, tips, commissions, fees, or salaries).
Here are the key reasons why passive income rocks:
- You are the boss. Sure, you may have a separate job with an employer and a regular salary — but where your passive income is concerned, you control it. Whether you own a traditional business or franchise, rental property, products that you have created, or other income-producing assets, the operative word is own. You are in the driver’s seat; the regularly recurring disbursement of funds into your pocket is a direct RESULT of your actions, and usually proportional to your efforts. Quality matters. But once a passive income stream is created, it’s pretty hands-off from that point on.
Of course, there are scenarios in which you will still be involved in some work, but most of the heavy lifting takes place before you begin seeing regular passive income payments.
Here is an example where passive income is a.) a result of your actions; b.) proportional to your efforts; and c.) fairly hands-off after the money starts rolling in: You purchase a home that needs a small bit of fixing-up with the intention of renting it out to a tenant. If you are thorough and do not cut corners, scrape off the old paint before applying the new, take measures to make repairs properly, and select your tenant with care and proper vetting, then you will be minimally involved with the property and tenant once the lease is in full effect. Nice.
- You can go where you want. In most situations, you do not need to be tied to any one particular location to reap the benefits of passive income. A laptop and an internet connection are likely the extent of what you need in order to check in and stay on top of things once in awhile. Most people with a linear income are tied to a specific location.
- You have time. One of the most valuable aspects of passive income is time — one of the few things we cannot create more of. What do you want to do? What is important to you? A hobby? Spending more time with your family? Volunteering? A job? Creating more passive income? Go do those things! You can do them, because you have an income stream that is on automatic pilot, and does not have to be your primary focus.
- You have security. No matter the economic climate, you have some money rolling in. If your company suddenly downsizes and you’re left without a paycheck, you still see regular deposits into your bank account. If you or a family member becomes injured or sick and you need to focus solely on that for a while, you have one less thing to worry about. With passive income, you can count on money rolling in, no matter what.
- You have the potential to achieve complete financial independence. Why stop here? With the time freedom you create, you can start new businesses that generate more streams of passive income. The sky is the limit. Earn enough income, and live life however you choose.
So, what is the simplest and fastest way for the average person to start generating passive income?
In my opinion, the answer is network marketing and affiliate marketing. Unlike some of the methods from the examples above, these methods are actually pretty straightforward, with relatively minimal risk. They do not require that you create your own products. They do not require an exorbitant financial investment (relative to buying a home, starting your own insurance company, becoming a pop star, etc.); there is minimal red tape (i.e. all of the infrastructure, tools, training, support, and systems for your business are already in place).
Basically, what’s required to be successful is staying coachable and taking consistent action. You will work hard. It is not easy. But, it is simple. Follow the systems that are in place, take massive action for a relatively brief period of time, and you will achieve what I call TRUE passive passive income.
Here is the icing on the cake: not only are these considered legacy businesses (meaning they can be bequeathed to your loved ones once you are gone), but the passive income they generate has the potential to grow. Exponentially.
I have friends who have reached a tipping point in their network marketing businesses, who can walk away completely. Toss their laptops into the sea and never look back. And guess what? Their income has the potential to continue to increase year after year (just as it’s doing now) even if they chose not to do any additional work.
How powerful is that?