When I learned about passive income, it changed my life. I no longer focused so much on saving money to spend it later, I started to look for ways to invest my money. In this post I hope to accomplish that for you , I want to give you the gift of being smarter with your money.
I like many others out there was taught to save my money and then go out and purchase what I was saving for. I was so excited when I got my first part time job in High School, I remember one of the very first things I saved for was a pair of jordan’s (the original white/black pat and leathers!). It took me a couple weeks but I finally got them! I was so proud of myself I didn’t even want to wear them just keep them in the box and stare. At the time I didn’t realize the significance of what I had done, I was just doing what I was taught and modelled after what I saw my mother and all the other adults in my life since I was a child.
This behaviour continued well into my twenties; every time I wanted something and didn’t have the cash I would save my money and go out and get it when I finished saving for it. The problem with this strategy was that every time I wanted something new I would have to raise the money, spend it, start all over again and continue on this never ending cycle that Mr Robert Kiyosaki calls the “The Rat Race”
We do this for everything; rent, car payments, credit card bills, student loans, vacations, etc. These are all examples of liabilities check out my post what is the difference between assets and liabilities? if you’re not sure what that means.
The reason why I wanted to share this with you is because passive income to me is a lifestyle, your choices with what you do with your money on a daily basis.
What is passive income?
If you google it this is what you’ll get:
Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of “unearned income“.
This definition in my opinion doesn’t really give a clear understanding of the concept of passive income and how it applies to you and I on a day to day basis or how to acquire it. I would add to the definition: Passive income is an income received on a regular basis, with little effort required to maintain it but you have to work really hard initially to create it. The original definition could mislead people to believe that passive income comes effortlessly.
How to do it with Real Estate?
To have something pay you over and over again with little effort takes a lot of work. In real estate one example of passive income is by owning a rental property. The payments your tenants make on a monthly basis is income received with little effort and it comes at the beginning of every month; however, it’s not that easy to maintain a property or find a buy and hold that will truly give you the freedom to just collect rents and not have to worry about a thing.
You will have to put in a lot of work in the beginning. You have to due your due diligence on the property, the neighbourhood, the previous owner, who will be around for emergencies, what happens during vacancies, evictions/problem tenants, who deals with minor repairs, who keeps up with the lawn, snow removal, etc.
Once you have a solid plan and have set up a system that will allow you to sit back and not have to worry about the day to day operation of your rental property; your income from that rental will be considered passive. This is the truth about passive income, set up a system that requires very little effort from you and continues to pay you.
This is how people become financially independent, they generate enough passive income where they can live life however they want. This is how you too can become financially independent.
Learn different methods to generate passive income, use your money wisely. Instead of spending money in liabilities invest your money in a system that will provide you with the passive income that you need in order to purchase whatever it is that you want. Use your money twice and then spend it, that’s what the rich do.
Start small, figure out a way to generate $100 a month of passive income. I want to hear what ideas you have and how you plan on doing it, use the comment section below to share your ideas and share this post with someone you think can benefit from learning about passive income.
Until next time!