This article is one out of seven that I wrote about wealth. The whole series contain a lot of free valuable information about key factors that can help you become wealthy. The rich do things in a different way. That difference is the one I want to explain here. Let’s scrutinize together these strategies that can make you more money and help you boost your income.
The whole series contain the following articles . . .
1. Add Value.
2. The Multiple Streams of Income.
3. Passive Income.
4. Residual Profits.
7. Compound Interest.
You receive passive income when you are able to set up a business on autopilot, receive royalties from your art or creativity or make consistent profits from your investments. There are different ways to receive passive income. Some of them are more effective than others. I will show you a few examples here.
First let’s explain how important it is to have passive income. Most people work too much on their jobs. They exchange their time for money. If they stop working, they stop earning. On the other hand, with passive income you can be making money while you sleep, relax or work on something else.
The ultimate strategy would be to set up a stream of passive income first. Then when that one is generating profits for you and you have some free time for other ventures, you go on and set up other and other and other. That way your passive income sources will increase exponentially.
You will soon realize how this can bring you financial freedom. When you follow this strategy it comes the time when you have two options. Number one you can work as much as everybody else does and become rich! Number two you work much less than the average person and you still have above average income!
Let me explain my point of view. If you work 3 – 5 hours per day but make more money from your business in annual income than the highest paid professions in the world, then you are working less than the average person and making more. So, you are financially free!
For example a doctor makes on average $150,000 annually from their profession more or less and they work several hours per day. If you can make more than that working only 4 hours per day, then you are making more than other people and working less. That’s the idea. That’s what I try to mean.
Further more, if some of your streams of income are completely passive, then you may stop working at all and don’t do anything, and still you will break even. You may be able to pay for your monthly obligations and still get money to have fun, travel, etc.
The reason you work a few hours per day is because some of the sources of passive income you have require maintenance. You will make money even if you are not constantly monitoring them, but to ensure that everything is ok you still need to check from time to time that everything is running smoothly.
You can find a few sources of passive income that do not require any work at all, but they are rare. Most of them come from investments and they do require you invest some substantial amount of money.
Anyway, when you can receive passive income you are in an enviable situation. You can be financially free, meaning that you do not have to work to make a living. Some or all of your businesses can be placed on autopilot. You wonder around and check how is everything from time to time, but most of the time the businesses produce profits by themselves when you are absent having fun or doing something else.
If you choose to work more and use your abundance of free time to set up more streams of passive income then you simply become rich. That’s my second point above. If you can manage your passive income businesses within 3 – 5 hours per day and you make enough income with that to live well, then you can just go relax the rest of the time or work more and set up more streams of passive income.
If you choose the second option, you may very easily become rich. This is a trend, a pattern. When you can increase your passive income exponentially over time, you make more and more money every month and year. It grows exponentially. If you use the surplus capital that you are receiving and invest it, you may receive profits from your investments that are completely passive.
Then you reinvest those gains and compound your profits. This leads us to other subject that I explain in one of the articles of this series titled Compound Interest. When you use this strategy it comes the time when you have many streams of passive income. If you are working already 8 hours per day on your passive income businesses you won’t feel like creating more streams of revenues because you will be already very busy.
On the other hand, if all your sources of income are passive and you are working 8 hours per day just to give them the required maintenance, then you will probably become rich. Think about it, most streams of passive income require just a few 3 – 10 hours per week of maintenance. This includes certain kinds of Internet businesses, profits from royalties, some investments, etc.
If it is really passive income you won’t have to spend much time on it. The reason why you would have/want to work 8 hours per day on your passive income businesses is because you have several of them. That’s why I say that if you work more you become rich and if you work less then you have lots of money to live happy and in peace. It is a win-win situation. Whatever you do, you win.
Now, notice how the majority of people have the opposite. For whatever reason they have a job and no streams of passive income. As I wrote above as well as in other articles, if they stop working, they stop earning. No matter how hard they work or how many hours they work, they can not increase their income exponentially. They can not become financially free nor rich this way.
On their job they have to produce more than they earn. This is the opposite to having passive income. If you don’t produce more than you earn the company will go bankrupt. This makes sense doesn’t it? The owner of the company needs to have a reason to keep you hired. The reason you are hired is because you make the company/owner more money than the money that it is spent on you to keep you hired.
Now, you will never know how many hours of your time and effort you donate to the company everyday, but you know for sure that you produce more than you earn. When you have passive income you earn more than you produce. You use some sort of leverage. That’s the only way you can do this.
You can use a system, machine or person. For example you can use the Internet. While you are actively working setting up other streams of income the Internet may be generating passive income for you. You can use machines, like computers or some other kind of machine that leverage your efforts. You can use people.
In fact one of the ways to generate passive income is to hire people to do the work for you. The drawback is that you will often need money to do this. So, unless you have already money to invest and want to do so, you will have to start setting up streams of passive income yourself and once you have money to invest you can hire people to do certain tasks for you.
You see, this is all very simple. The rich know all of this and they do it. When I started to understand how the system worked I started a business. I wanted to work for myself. So, I quit my job.
Then I realized that it was a mistake. While I had some savings, I still needed the income that I was getting from my day job. Often when you start it is hard. The more resources you can have to back up your efforts the better.
I have known many people who changed their lives and started working for themselves, but most of them kept the job they had until their streams of passive income started producing substantial profits. No matter how good your business plan may be you don’t know if it is going to work for you until you see the results.
I have started many businesses. Some have not worked. Other have been a complete success, but my favorite ones are those who have produced since the beginning automatic passive income.
There are many choices out there and there are many choices for you. Ideas are important. The more ideas you get the more informed you will be about your possibilities. Everyone is different though. What may work for some people may not work for you and vise versa. But I do believe that everyone can create at least a few streams of passive income in their lives and I think this is one of the best things someone can do to attain financial freedom, wealth and prosperity.