The term “passive income” has become very popular in recent years. Many people have their own theory about what it means, but none of them are right. It’s time to set aside this myth and learn the truth about how much money you can make with a steady stream of revenue!
So let’s get into it! Read on for all the details on why passive income is a myth…and then take action by developing your skill or skills that can be profitable year after year.
Why is having a lot of money a bad thing?
There are many reasons why having lots of money is a difficult goal to achieve.
It could create more debt. If you spend all your income on expensive gadgets, traveling, and fancy dinners, you will end up with no savings.
If you need to save for an unexpected expense, you won’t have enough money left over to survive.
You might feel like you don’t do anything significant because everything you do earns just a small amount of money.
But these things only matter if you want to stay happy and avoid becoming unhappy. And most people who are rich know exactly what we mean when we use the word “happy.”
Another reason not to strive for wealth is that it takes work to keep yourself motivated while you're saving.
So what is “passive” income? Well, let’s look at the definition. According to dictionary.com, that word means “to receive money or benefits without doing anything to generate it.”
In other words, active income requires you to work to achieve it. You have to go into a store and sell something, or take steps to offer your services, to earn it.
By contrast, with passive income, you spend your time selling things, offering your services, or creating content so people can access those products and services. Then they do the math and pay you for them!
That’s why some people call this type of income "revenue generation," because you don’t need to actively work to get it (though you may want to sometimes). It comes to you automatically via sales, advertising, or audience engagement.
It's also worth noting here that all successful people in the history of civilization earned their income passively. Bill Gates, Oprah Winfrey, Steve Jobs — none of them made a ton of money working hard long hours in a garage. They left that job up to someone else.
Their success came from being good at marketing and business skills, not programming skillz.
There is no such thing as “get rich being someone else's employee.” Or “being paid to watch TV or read books.” Or even “hanging out in your parents' basement, collecting toys and gadgets."
All of these things are examples of what people refer to as "passive income," but they're wrong!
They assume that you must be doing one of those things to make money. But it takes far more effort than that to earn true wealth.
So why do so many people believe in this myth?
It seems easier than working hard and going after what you want. Plus, most people don't know how to handle large amounts of money, making it easy to take advantage of them.
But investing money in stocks, retiring early, buying a house – all of these require lots of money and planning ahead. They're not things everyone has access to.
Making money isn't about spending less time at work and waiting for checks to come in. It's about putting in the same amount of effort into your career and life as you would normally.
There is no such thing as true, pure passive income. At least not in the real world.
The term “passive” implies that you don’t have to do anything to make money – it comes to you!
This isn’t exactly how things work.
Passivity can be achieved by having lots of resources and products that produce consistent revenue for you (this is what most big companies are built on), or it can be through investing in assets that keep producing even after you've sold them - this is called dividend reinvestment.
But neither of these examples fit the passive income myth.
You must actively manage your investments, which means there will be times when you have to work to ensure everything continues to function properly and your goals are met.
And being an investor means going beyond just buying stocks, bonds, or currencies- you also have to monitor the performance of those purchases.
It's all very hard work that doesn't earn you much credit with others. But it's what keeps banks competitive and wealthy corporations successful.
Active investors deserve their place in the history books, because they contributed to our economic growth and wealth.
What about people who say they'll one day retire on their own savings? They're probably aware that retirement requires significant savings, but none of them seem willing to do the hard work needed to get there.
There is no such thing as a beginner’s start to investing or starting your own business. Investing is not for the faint of heart, nor are there any easy ways to make money. If you have a good business concept that can generate income, then get into it with both feet!
Just because someone else has done something similar before does NOT mean YOU CAN’T MAKE MONEY OFF IT!
Thinking that you could be one of those people who made it from nothing just by trying harder is pretty dang expensive! I know, I spent some time thinking that way in the past.
Luckily, I have learned my lesson now and will tell you all about why passive income is a myth here. So, let’s dive in!
Why is it called a “passive” income?
The term “passive income” was first used in an article published online back in 2005 by entrepreneur Sean Nofer. He described this type of revenue as coming “in line with what we pay our bills”. This is clearly different than what most people do where they work full-time at jobs and spend their hard-earned money going out every night.
Nofer also mentioned how difficult it is to achieve this kind of income due to the amount of investment needed to get started.
There is no such thing as “passive income.” Sure, you can earn money while sleeping, but that doesn’t make it passive income.
You have to actively work to maintain that income stream, which makes it non-passive. Now, some people talk about their “passive strategy” or “lazy person's way to do business,” but that isn't really what they mean.
They mean not doing anything to gain new customers for their product or service (which is just plain old bad business practice). They mean staying in bed instead of going out to meet with potential clients (also not good business etiquette). They mean being dependent on someone else for your income (no self-confidence).
All of those things are active, not passive.
There is no such thing as passive income. At least, not in the sense that most people think of it.
“Passive income” has become like the gospel for many entrepreneurs – you just have to believe it, and then go out and make it happen!
But before we get into the why of this myth, let's talk about what real or active income is.
"Active income" comes from producing or offering products or services to other people (this is called "income generation"). For example, if I own a restaurant, I'll be earning active income being paid to work, and also generating an additional stream of revenue through tips and business lunches.
I can choose how much time I want to spend serving food and drinking coffee, so this is considered a form of personal employment. But since I'm opening my restaurant up to the public, I now have to deal with another group of people - customers- which requires different levels of motivation and engagement.
As a business owner, I will always be working because I will never truly enjoy my job unless I am investing some energy into it. This doesn't mean I don’t enjoy cooking and talking about food, but instead I learn something new every day by interacting with all types of people.
So while I may earn a paycheck doing something I love, I still have to push myself to do my best work due to the lack of certainty that money will keep coming in.
There is no such thing as passive income. At least, not in the way most people think of it.
You see, most people believe that they can earn “passive” income by doing something that makes money already (the “active” part), then letting someone else do the work of keeping the business running – with paychecks coming in without your input or supervision.
This misconception about what “passive” means comes from the classic example of the person who owns a restaurant and earns enough profits selling coffee and pastries during lunch hours while you sit behind his or her desk and manage the rest of the business.
That person is probably still getting paid very well, but they are definitely not earning a “passive” salary anymore! They have to keep up with all sorts of financial reports and tasks that were left for them to handle before.
Running a business isn’t easy, but it doesn’t have to be difficult if you are willing to put in some work. Starting your own business involves creating an idea that will turn into a product or service, producing that product or serving that market, and then marketing that product or offering that service.
It can seem impossible at times because making money online is a tough game to win. You need to find ways to reach out to large audiences, and you have to figure out how to get those people to buy from you.
But I don’t think this makes passive income a myth. I believe it takes more effort than most people give it credit for.