What is this Passive Income you speak of?

Seven coin stacks gradually getting larger from left to right, as if growing over time on a chart

Many, many years ago I remember standing in line at my local bank branch, quietly waiting my turn when my attention turned to a hand-written whiteboard sign on the floor – “$200,000 in a savings account could earn you $800/mo in interest!”, it called out to me (or something to that effect).  I think my mind exploded a little bit while processing the message.  I distinctly remember thinking how that amount of monthly interest would basically cover my cost of living at the time. My imagination quickly turned to all of the new compact discs, doc martens, and roller blades that I could afford – until reality set in that I was about two hundred thousand dollars short on savings, give or take fifty bucks.  It was probably my first conscious conceptualization of passive income and how powerful and freeing it could be, though I didn’t label it as such at the time.


What is it?

So what is passive income?  At the risk of overstating the obvious, it’s income you make when not actively doing work.  Perhaps better stated, it’s making money on work that you’ve already done with little or no time and effort re-invested.  Passive income means that you’re being paid on evenings and weekends when you are not at work, when you’re on the beach on your tropical vacation, or when life happens and you find yourself in a situation where you can’t work for one reason or another.  Effectively 24 x 7 x 365, dolla dolla billz, y’all.  Passive income is ultimately a path to true financial freedom, and one that can tilt the work / life balance in whatever direction you so choose.


Free money for doing nothing? Sweet, sign me up!

Well hold on a second there, friend.  The operative phrase above is with little or no time and effort re-invested.  I think that’s an important distinction to stress.  Some people might think or suggest that truly passive income requires zero effort, but that’s a bit of a chicken and the egg conundrum.  At a minimum passive income still requires an up front investment of some sort – usually an investment of time, effort, or money.  Without that initial investment, there’s nothing to earn a return on.  Beyond that up front expense there may or may not be some degree of ongoing maintenance or ongoing level of attention, review, updating, re-balancing, or what have you required to keep those passive income sources flowing as efficiently as they can be.  The point is that there’s still some hands on work to get going, but once you’re setup the ongoing level of effort should be minimal.


Fine, free money for doing something.  How do I get me some of that?

There are many ways to earn passive income. From more traditional investment options like savings accounts, stocks, bonds, and mutual funds, to loyalty programs that give you rewards or cash back, to new age FinTech (Financial Technology) like peer-to-peer lending, cryptocurrency, or online content creation – there is no shortage in opportunities available for people who are interested.  Keep in mind that not all passive income opportunities are created equal however, as some will pay higher dividends than others, some come with higher degrees of risk, and some will require more time and effort.  It’s just a matter of figuring out which ones best suit your own situation and lifestyle.


Dialing it up to 11

Now on the surface that might seem all well and fine to you, but here’s where passive income gets REALLY interesting in my mind.  Imagine going to work on Day 1 and being paid for it as your normally would.  Now imagine going to work on Day 2 and being paid for the work you did that day, and being paid AGAIN for the work you did on the first day.  Maybe more or maybe less this time around, but you’re getting paid for Day 1 again.  Now think about what that would mean for you over the course of a week, month, year, or multiple years. This powerful concept is like compound interest but for time.  It also means that time becomes much less of a factor on the amount of income that you’re able to generate.

How can a person make this magical unicorn money that keeps paying you every day you ask?  By becoming an online content creator.  What’s an online content creator?  Well that could be a graphic designer, photographer, musician, blogger, YouTuber, writer, or any other person who is creating new and relevant content on the internet on a regular basis.  The point is that you create some kind of content for your audience to consume and you make money off of that content somehow.  People will find your different pieces of content over time and you will continue to get paid for them regardless of how old they are, not just once off like you would when you earn your regular paycheck.

But I’m not a world renown recording artist, actor, photographer or someone who gets paid royalties or advertising dollars you say?  Well thanks to the internet, now you can be.  New tech is always disruptive, and now is no exception.  There are now many different investment options available that simply were not available to the average person before.  You like photography?  You can sell your pictures on a variety of sites now.  Are you passionate about a topic and have a voice and opinions on a subject?  Fire up your own podcast, YouTube channel, or blog.  Don’t have the time to do that other stuff, but have some money you want to invest?  Become the bank with crowdsourced peer-to-peer lending or real estate.  Opportunity is at your fingertips, it’s just a matter of taking that first step.


Today is the day

I didn’t realize it back then, but that whiteboard advertisement at the bank was selling me on one form of passive income.  Now I find myself on a quest to fulfill that idea, that perhaps one day I might be able to generate enough passive income to continue living at the same level that I do today without having to work full-time.  I think I share that goal with a lot of people, after all who wouldn’t want to have the luxury of financial freedom and the ability to choose when they want to work?  There’s a ton of passive income options available now that didn’t even exist back then, and I’m looking forward to trying them out and sharing my thoughts and experiences on them.  Time to get to it.

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About the Author: passivedub

Hey, I'm a regular joe trying to find a better way to earn money and live a better work life balance. I'm not a financial advisor, I'm just sharing my thoughts and experiences on different ways to make passive income.

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