This article and video looks at 4 potential positive impacts of passive income on finances and lifestyle.
Passive Income [Video]
Passive income isn’t a make money quick scheme that you can use to buy a lambo using only your mobile phone and wearing pyjamas. The reality is that it takes an investment of time and/or money to generate sustainable revenue streams.
The potential benefits of passive income however are great and below I’ve broken them down into four sections.
Time is said to be the only limited resource on the planet. We all get a set amount and spend it in the way we see fit.
Entrepreneurs who are able to build enough passive income streams to sustain their lifestyle are able to use those funds to free up time.
This might involve quitting the day job or at an earlier level hiring a cleaner to buy you a few extra hours a week to work on your side hustles.
If time is money then having regular income that doesn’t cost you time is a worthy goal.
Freeing up time creates space to learn new things, research emerging technologies and explore new opportunities. Over the long-term this can have a positive knock on effect to a persons finances.
Compound interest is effectively “the interest on previously earned interest”. It can lead to exponential financial growth.
“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” – Albert Einstein
Compound interest affects passive income streams in different ways. An investment in the stock market could appreciate value but will also generate dividends which can be set to be automatically reinvested. Writing and publishing a book can generate revenues but will also grow your personal brand providing secondary benefits and a snowball effect over time.
Passive income is also well suited to dollar cost averaging (a form of regular investment). A proportion of the monthly passive income can be directed straight into an investment portfolio. Over a number of years this evens out the ebbs and flows of market volatility and is a highly effective way of building wealth.
When I was in my early 20’s I was working as a mechanical compressor engineer. This meant getting up early, getting covered in oil throughout the day and finishing late to come home and start work on my other projects. What drove me during this time to pursue online business was the freedom that it promised.
When I started working full time on performance marketing I realised I could work remotely from anywhere with a WiFi connection. I travelled a lot during this period and it gave me the freedom and balance that I craved.
True passive income gives you opportunities to travel, set your own schedule and fit work around a desired lifestyle.
There are so many options available for remote work now. WeWork offices are in every major city in the UK and you can setup an account and use them on a day to day basis. There are coffee shops everywhere and whole communities like Google Startup Campus that help facilitate remote work.
Prior to Covid travel was getting easier and there’s nowhere in the world that doesn’t have an internet connection… almost! I did have to hike up a mountain (arguably a hill) to tether a phone signal on a remote island in Fiji once. Post Covid I’d happily do that hike every morning.
Passive income can add stability and security to our personal finances.
Diversification is key here and having multiple sources of passive income means if any one thing goes wrong then there’s other sources to fall back on.
Things do go wrong and often. Tenants move out of rental properties, Google pushes out an algo update which destroys organic search traffic, Bitcoin crashes like it hit an iceberg.
Before relying entirely on passive income streams having some sort of diversification in place is important to give you peace of mind that it’s sustainable for the long-term.
I hope you enjoyed the video it’s an attempt to level up my editing and production efforts and make more interesting content.
There are some passive income stream ideas here if you need inspiration:
Passive income takes an upfront investment of time and sometimes money. It can take months if not years before this effort starts to generate a significant return. I hope this article provides inspiration to keep going and working towards the goal of generating time, interest, freedom and security.
If you are interested in learning more about the performance marketing side of online business then check out this free digital marketing course.
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