What does passive income have to do with productivity? Well, let me give you an example.
Let’s say you need to work to get some income. Without doing the work, your income won’t go into your pocket.
When you don’t feel like you want to do the work due to various factors, you have to force yourself to do so, your productivity, and the spirit to do work plummets.
On the other hand, if you have your own product or know the ways to monetize it through your website, for instance, you receive income regardless if you do the work or not.
Of course, in the initial stages, you do need to work on your product or course or website. Once any of them has been set up correctly or even automated, you can see the progress, and also do other things that are passionate and matter to you the most.
What does passive income mean again?
Simply, if you earn income without doing much work on your side, then that is considered passive income. In other words, let’s say if you take your day off and yet your income keeps flowing in, then that’s passive income to you :).
Sounds fantastic, right?! It is literally anybody’s dream, don’t you think?
Anyway, read on.
How does passive income work?
You have to have things that can bring you passive income. The starting point of creating or acquiring assets is not going to be smooth-sailing. Expect some unintended or unfavorable outcomes when you first start earning passive income.
But think about this. If you are focusing on a job with high pay, getting hired is easy and straightforward (although it’s not always the case nowadays), but there are several possible risks associated with clinging on a job.
If you have a lot of expenses to pay every month and suddenly (in the worst-case scenario) you may lose your job, how are you going to pay your bills? You could use the savings you may accumulate previously, but does it sustainable in the long run? Think about it.
On the other hand, creating assets like starting a website, and creating a product or course involves some costs and time to fine-tune before the launch. But once people see the value of what you do, they will buy whatever you offer, which then brings you revenue.
If you prefer more stability on getting your income every month, you could opt to offer recurring pricing options, which give your audience more choices and make the purchase that fits their needs.
Even if you are not on your computer at any time of the day, your audience will still be able to check out your site and what has to offer there, then make the purchase.
Why is the passive income necessary?
We tend to believe that getting a job is essential in your life as it enables you to pursue what you want and pay your bills.
But, until when are you going to work like that? Unless you are committed to that until the end (good for you, mate!), you may want to figure out the possibility of earning an income passively.
Meaning that even if you don’t feel like wanting to work on certain times or days, you still could afford to pay the bills and pursue whatever you want.
How can passive income make you more productive?
As I mentioned, having passive income provides a buffer (or even a replacement) to your current income, especially if you earn solely from a job.
Don’t get me wrong. I never said that getting a job is wrong.
But at times, you may not be in a position to do your work productively. I have to deal with it on certain occasions. But how would you feel when you still got paid while you are relaxing and do nothing? Sounds super enticing? I know, but if you can work on earning more passive income, then I’m sure you will thank yourself later on.
What are some examples of passive income?
If you have a website and know how to monetize it so that you can earn income directly through web traffic without much work on your side, then that’s passive income.
Do you love teaching people on a specific skill? If you create a course or a membership subscription and let your potential subscribers pay to you every month, that’s an excellent passive income source.
Do you delve into properties? If you rent or lease out your property to other people, you get to collect the rental every month. That itself is passive income.
There are so many more examples of how you can earn income passively. But the point is you need to have something that makes your income, whether you’re going to create that asset from scratch or acquire it from somewhere else.
What is the difference between passive and active income?
If you stop doing your work and your income also stops flowing in, that’s active income.
Otherwise, if your income is still flowing regardless of whether you do the work or not, yup, that’s passive income.
How is passive income taxed?
It varies depending on the region or country. Some are taxed as residual income, some are imposed on different categories, some withheld the tax (usually this is the case for corporations) in advance before distributing, and some don’t even tax at all.
I’m not the best person to explain everything about taxation matters, so it is best to consult a tax attorney in your area and discuss with him or her for that matter.
How much money do you need to make a passive income?
Nowadays, you don’t need to spend a lot of money just to acquire or even creating assets from scratch. Building a website is affordable with renting a web host (like SiteGround. Sign up and jump-start setting up a site for just $3.95 per month!).
Love teaching people through courses? You can simply start on learning sites like Teachable, Udemy, or Skillshare for free :D.
If you prefer using social media to promote your business or product, it won’t cost you anything other than your Internet connection.
Ideally, the amount of passive income you intend to receive is equal to or more than your current expenses. Even better if you could deduct certain amounts of your income to invest back into it. The value of assets you own will be increasing along the way as time goes. That is called the power of compounding.
And talk about value, you should pay attention to the amount of income you receive rather than the ups and downs of your assets.
How do I generate passive income?
It is good to learn more about generating passive income, but once you get the hang of it, JUST DO IT!
Don’t let your fears ostracize you from doing what matters you the most. JUST START PURSUING THAT DAMN THING!
Need some encouragement? Talk to me right here :).