Passive income has become a widely discussed topic over the last few years in the finance space. Several sellers have come out with products that mention passive income but do not teach anything about the subject. Several opportunities have also been presented to earn through passive income.
Passive income is generally known as a stream of income involving little or no ongoing effort required from you in order to sustain that income stream. Passive income is not directly proportional to the resource invested in its acquisition. Active income on the other hand, operates through the traditional method (typically a job or part-time job), which is a direct exchange of effort, time, and skill for income. From this definition, one can quickly think of passive income as money earned while sipping a bottle of wine, sitting on a beach. However, passive income requires some work to get it going.
Passive has (and is still) served as a complementary source of income for several people, individuals, business owners and entrepreneurs, and has proven to be crucial during other tough times such as the lockdown imposed by governments response to the coronavirus epidemic. Passive income will keep money flowing when you lose a job or experience any financial difficulty. When you’re concerned that you can save enough of your earnings to achieve your retirement goals, building wealth through passive income is a tactic that might appeal to you too.
WHY IS PASSIVE INCOME IMPORTANT
The answer to this question is simple; time and money. Time is man’s most important commodity. Time cannot be bought and no human can have more time than another. It exists once and disappears, it cannot be created or saved, it comes and goes. This is the exact reason passive income is of so much importance, because time is more important than money.
Unlike money that can be earned, saved, spent, invested, squandered, and lost, we can’t spend a few minutes on a clock. We can’t expect dividends for seconds or hours in the bank, or invest the time we haven’t used for anything else. Bearing in mind that most of the free world have to work for a living, consuming much of the time they have, this precious commodity needs to be prioritized.
Passive income is an important strategy which the millionaires actively utilize to increase their wealth. With passive income, you make money with every passing tick of the clock, whether you’re asleep or you’re awake. It keeps coming in. This is how you detach your ability to make a profit from the limited time you have in a day. With passive income, you make money while you’re sleeping. You make money, too, while you’re awake. It’s automatic, and it just keeps coming in.
There is a mental clarity that comes when the stress of making money is eliminated. With passive income, you no longer live from paycheck to paycheck and there’s emotional stability which sets in. you become free to spend your time on other things and become more productive. You spend time with your family, improving your health, having the freedom to escape from a job that you hate, or pursuing a creative passion that would otherwise be relegated to a few hours of your free time during the weekend.