kingmarine posted: " Life is good! Life is even better when you have multiple streams of passive income replenishing your bank accounts. So, what is passive income, and how do you get started? I'm glad you asked. Passive income is what separates the rich from the poor. Ho" Military Family Investing
Life is good! Life is even better when you have multiple streams of passive income replenishing your bank accounts. So, what is passive income, and how do you get started?
I'm glad you asked. Passive income is what separates the rich from the poor. However, you don't need much passive income to change your life completely. Let's explore.
You need assets. Passive income is revenue that your investments generate. Robert Kiyosaki says in "Rich Dad Poor Dad," an asset is anything that puts money in your pocket.
Rich people figure out how to turn everything in their possession into assets. They buy cars they love, then use them for a Turo rental car business. Now their supercar makes them money. They do the same for boats and RVs.
Poor people buy the car of their dreams with earned income from their job. They go to work to pay off debt on a liability. A liability is anything that takes money from your pocket.
Even if you get a gifted car for free, it is still a liability. The gas, insurance, registration, emissions, and maintenance will drain your resources. Again, rich people find ways to convert these negatives into positive cash flow.
Cash flow for everyone. I'm here today to let everyone know we can all make passive income. There is no one stopping us from changing the trajectory of our financial lives.
Once you change your finances, you'll see the world through a different lens. As I wrote in my Debt-Free Society series, it's like Dorothy entering the world of OZ in full color.
Passive income poor vs. rich. The main difference between building passive income streams is that rich people already have the resources (community, money, connections) to continue their journey.
It's much easier for a rich person to get involved in an apartment syndication deal that will cash flow them $800/month. They have the background and knowledge that brings investors to their doorstep.
However, that doesn't mean poor people are out of luck; we must look at things differently. We can rent a room in our home for $800/month and achieve the same level of income as the rich person's deal.
A rich person may buy a high-end Tesla as a business car, and we may buy a newer model Ford. Once we understand that our passive income differs from the rich, we can come to terms with the situation.
Improve your financial standing. The key to our financial lives is building enough passive income to cover our expenses—at this point, we are financially independent.
It takes far more passive income for a rich person to become free because they have many more expenses than us. If we can keep our costs low (say $4,000/month), we can become free much sooner.
Grow your income. Once you have a few income streams, there is one more step to follow. Convert your passive income into even more passive income via dividends.
This is the step that most people forget or overlook and why rich people continue to get rich over time—their money keeps growing on its own.
Suppose you had a roommate for three years at $1,000/month. The total amount you earned is $36,000 in rental income. Let's say your adult daughter had to move home, which forced you to lose your roommate.
If you used that $36,000 to pay expenses, you are no better off than when you started. Sure, you relieved some stress by having additional cash flow, but that money is now gone.
Rich people would take purely passive income and keep it growing by investing in dividends (or other assets). If you had invested that $36,000 into an income portfolio at 10%, it would pay you $300/month for the rest of your life.
Don't forget to reinvest into more income. Building Passive income is a fantastic accomplishment—one most people will never achieve.
However, use passive and earned income to feed your money system (dividends). Then, not only will you have a room rental for $1,000/month, you can have the dividends earning you $300/month for a total of $1,300/month.
If you keep slowly growing your money system while adding to your other income streams (rising room rental costs with inflation), your passive income will grow exponentially.
What is exponential growth? It's hard for the human brain to fathom the power of compounding. Exponential growth (compounding) is growth by a percentage, not a number.
For example, we can say we will raise rents by $50/year. However, it's exponential growth if you say 10% a year. Which method will yield more significant returns over 10 or 20 years?
When you start building passive income, you give yourself the ability to participate in exponential growth and compounding. You'll see it in your websites, book sales, dividends, and rent increases.
The only person stopping you from building passive income is you. Research Craigslist shared room rentals near your home. These landlords are earning passive income while you read this article.
Conclusion. Everyone can have passive income. You can release a study guide online to generate $50/month if you are a college student.
As a school teacher, you can create a tutoring business via a YouTube channel and earn $200/month by reviewing math problems.
If you live in a remote area of Montana, you can start a farm and document your journey via a blog. Many people want to escape the city but lack information from the "ground level." You can easily earn $1,000/month within two years.
This person loves to play ultimate frisbee, but the world says to get a real job. I write daily to show you that you can do what you love, make a difference in the world, add value, and be happy.
However, these are all learned traits. You must build up your knowledge base to enjoy the luxury of passive income. That's why I am here. Good Luck!
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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