Passive income – What is it? How do you make it? Why should I know about it? Why should I even care?

Let’s get started…

Have you ever heard of making money while you sleep? Lots of people have, but really, what does that mean? Most of our workforce is doing what we call “trading dollars for hours.” That’s not making money while you sleep. That’s going to work, putting in time, and getting paid for the actual hours you put in. Passive income, on the other hand, is getting your money to work for you – while you’re working on something else. (And ideally, you’ll have multiple sources of passive income. See more on that here.)

In fact, many people don’t realize that this is what actually happens when you retire and are using money from your IRAs and 401(k)s to live on. It’s what we financial advisors do (or what I did) when a client retires…figure out how to create a paycheck off of the clients’ retirement investments to create an income for them while they go play!

Why should you even bother?

I’m not really sure I need to explain this in much detail, but I’ll give it some: if your money is working for you, it frees you up to do other things. This gives you the ability to have freedom and flexibility in your time. And who doesn’t want that? When you build multiple sources of passive income, you can build yourself a paycheck that comes in while you go do things that are important to you, like spend time with your family, volunteer, travel, work on other projects, cook (okay, that’s one of my hobbies) – but you get the idea. And this, my friends, gives you the opportunity to turn your annual income into your monthly income.

Multiple sources of passive income is part of a great formula for building wealth.

Not the only part, but an important one.

Okay, so I hear you…How? I believe that there are many ways to create passive income. You have to decide which ways are right for you. We’ll talk more about income driven by passion soon. But in the meantime, here are just a few examples of passive income:

• Earning money off of your investment portfolio (like through bonds or dividend paying stocks – we can talk more about these in the future)
  
• Rental properties (with positive cash flow, of course – ask me if you’d like me to explain what positive cash flow is)
• Vending machines
• Parking lots
• Laundromats
• Network marketing (as long as you’ve built is so that you can actually walk away – and yes, I said network marketing. It’s just a business model, people.)
• Billboards
• Intellectual property
• Royalties
• Books & ebooks
  
• Other internet marketing ventures
• Sell subscriptions (ex. for software, or a membership site)
• Sell franchises of your business
  

I hope this gets the ideas flowing for you. This is only a partial list.  Consider the idea of doing something once and getting paid for it multiple times. Brilliant, isn’t it?

Can you think of more? What are you doing to create passive income? Are you even thinking about it? Has this got you started thinking? Do you realize this can be done while you’re still working at a job or trading dollars for hours? I’d love to hear your ideas and feedback…we can brainstorm together!