Working nine-to-five to make a living is so ingrained in our culture that there are songs about it. But what if you could make a living without working nine-to-five? Active income is the money you make in exchange for the time you spend working, and it consists of your hourly or salary wages. Passive income is money you can continue to earn after your effort on a project has concluded.
You can make passive income in a variety of different ways. Some people choose to get into the real estate market and rent out properties. Others decide to invest in stocks, or they put money into rapidly growing cryptocurrencies.
You can even make passive income from things you already enjoy doing, like adding affiliate marketing links to your blog, or uploading your music onto a paid streaming platform. Not convinced? Here are six great benefits of earning passive income.
1. It Facilitates Financial Stability
Financial stability is the first step to a comfortable life. Financial stability is the point at which you can rest assured that your available funds will have you covered in case of emergency, while being able to support your spending habits in the here and now.
With a source of passive income, you are generating money to put towards savings or a more comfortable lifestyle without having to put in extra hours to get there. When you don’t have to overwork yourself to feel financially stable, you’re killing two birds with one stone.
2. It Makes It Easier to Reach Financial Goals
Having financial goals is an important step when it comes to budgeting and planning for the future. Whether you’re looking to make an expensive purchase or reach a savings goal, passive income creates opportunities. When you’re considering a large purchase such as a car, or the down payment on a house, you must consider your ability to continue making payments in the future, not just what’s affordable today.
Having a source of passive income means not only putting money towards those purchases faster. It gives you an extra source of security in paying off major loans in the future.
3. It Offers More Freedom
Living paycheck-to-paycheck means keeping a tight rein on your spending habits so as not to spend outside of your means. With passive income, you are giving yourself both money and time to spend pursuing the things you love rather than constantly keeping your nose to the grindstone just to stay afloat.
It also means that you can choose to rely less on your active income. You won’t have to worry about not making money during your time off. Passive income will flow into your bank account even when you’re not at the office.
4. It Ends Reliance on Your Paycheck
Relying on a traditional job for all of your income can be a financially precarious proposition. You never know when the job market might turn, or when an unexpected expense is going to pop up. When you have a source of passive income, you are no longer relying exclusively on your paychecks in such situations.
Having a source of income that is not conventional employment also makes you less reliant on your employer’s whims. If your employment situation suddenly becomes untenable for any reason, you can leave without simultaneously wondering where your next dollar is coming from
5. It Can Facilitate Early Retirement
Retirement can begin to feel like a far-off fantasy when you’re first starting to put money aside in preparation. It can take decades to put enough money aside to feel comfortable retiring in your old age. Passive income, however, creates an opportunity to put money toward that goal significantly faster, and without doing any extra work.
If retiring young is something you’re interested in, then passive income is the way to go. It provides you with a source of income outside of your day-to-day spending, that you can put entirely towards your future self.
6. It Reduces Financial Stress
The number one advantage of developing a source of passive income is that it reduces your financial stress significantly. Perhaps you’re just looking to feel financially stable, and you are looking for a second source of income that you can keep up with while holding down a full-time job. Passive income outside of normal business hours whenever you have time.
And better yet, it gives you more money to spend on the things you enjoy, instead of feeling confined by your paycheck. If having greater financial stability, freedom, and independence sounds like something you might be interested in, creating a stream of passive income will help you get there.