Why you should work towards passive income

We’re usually chasing our dreams and that’s a nice thing to do, but we may be on the wrong path when we do relly only on one source of income. Our dreams may crumble and we’re not going to be able to reach it because we haven’t planned well enough. And life always gives you some extraordinary circumstances which we cannot foresee.

In case you only rely on your salary you may want to consider creating new sources of income, because your income is directly correlated with how many hours you work. It’s a finite number of hours that you can work, so don’t expect to be able to retire so easy working like that.

Active income vs passive income

There are two types of income, the active income stream is your salary, which requires you to work an amount of hours to get an income. The majority of people are doing this and that’s fine, but if you want to become financially independent you need to work towards a passive income as well.

The passive income is money that you earn without being dependent on working a fixed number of hours.

You can correlate how many hours you are working for an active income vs how many hours you are working for a passive income. I consider that early when you get into a passive income you have to spend more hours for almost no income, but then it grows steadily and after a period you may not be required to work as much at all. For example with one of my websites I haven’t worked in 3 months and it still brings a nice cheque every month.

Good ratio for active income vs passive income

In case you are still at 100% active income I highly suggest you consider looking for ways to invest your cash. Depending on where you live there may be different options to consider, the simplest one may be a p2p lending platform or the stock market.

There may be different steps to reach, try going for 80% / 20% ratio, 80 for active income and 20 for passive, that should be a good start. And work towards the opposite, 20% active income vs 80% passive income. Working harder is finite by the number of hours that we have, so the income in this area is quite limited.

Learn from succesful people

If you are a financially savvy person then you must learn from the succesful people, see how they manage money, where they invest it and how they use it. If you have the opportunity look for a mentor in your local area, someone that may guide you towards your goals.

Another way of mentoring is by reading from books, you can learn something from everyone and to create your own path. There’s a lot of valuable information in the books and you can learn from others mistakes so that you don’t have to repeat the same mistake.

The odd thing about working hard

I’m a huge advocate of working hard, but I found an odd behaviour with people, which I probably had as well. You may hear people bragging about their salaries, It’s a nice social behaviour that we have, but it’s odd because you never hear how much free time they got. People won’t brag about how many less hours they are working and how much free time they got for themselves.

Why you should work towards passive income?

For me it’s a basic answer, to live life at it’s fullest the active income is something we created to provide value for others. Create value for yourself and live by your own terms.

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