The first step in learning how to make more money is deciding if you will use active income (also called earned income) or passive income to do it? Until I read a book called, “Rich Dad, Poor Dad” by Robert Kiyosaki my financial literacy was very low, so I didn’t understand the difference or why it mattered so much. Here’s what they mean…
Active Income vs. Passive Income:
Before I explain the difference, it’s important to point out that I am not saying anything negative about active income or jobs. They are important and so are the people who work them. Active income requires your personal time to earn money. Basically that means if someone doesn’t trade their time and talents for an hourly rate or salary in, they won’t get paid.
On the flip side, passive income is money you earn whether you work or not. Both types of income require hard work, but passive income gives you a chance to leverage the time, talents, and skills of others to make money to create cashflow or money without requiring your personal time. Understanding this difference was a life-changing distinction for me because it was a way to work smarter and make more money.
Why I Chose Passive Income:
Hope for a better tomorrow: Before I learned about passive income, I was working as a high school art teacher and at a group home helping teenagers through some of their challenges. I loved what I was doing, but there always seemed to be more bills than money at the end of the month. Even worse, when I looked at how long it would take me to give my family some the things they wanted, I didn’t see a way that would ever happen with my active income options.
One day a friend asked me if I’d be open to an option to make some extra money if it didn’t interfere with my schedule? Thankfully I said “Yes”
I did the work and it worked
A short time later, I received a check for about $90 and it was the first time I’d ever earned money without having to do the work myself and the direction of my life was changed forever. Another great thing I experienced, was that I kept getting paid over-and-over for the work I did one time and I also got paid repeatedly for the work other people did with me. I built a money making team and it is awesome.
The picture above is a recent picture of a repeat sale where I earned $210 on Valentine’s Day because I did the work one time and I get paid over-and-over. Passive income works IF you do the up-front work!
Unexpected Benefit
Priceless time with my dad – About 6 months after I started earning passive income with my home business, I received a call that my dad was diagnosed with cancer from asbestos exposure while working in the steel mills in northwest Indiana. I had no idea he was sick when I said “Yes” to my friend’s question. About a year after starting my business, I quit my jobs to focus and the timing was perfect because I got a call that my dad was in a coma and that I should come because he wasn’t expected pull through.
Thankfully he did, but he needed someone to take care of him full-time (24/7) and because I started working on passive income about year earlier – I was able to take care of him every day for the last 3 months of his life. I’ll always be grateful for the money I earn passively, but I’m most grateful for the time freedom of being there for my dad when he needed me the most.
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