Passive Income vs Active Income

passive income vs active income

What Is Active Income?

So, to find out what passive income is, it’s best to start with the opposite. Active Income! Yeah, sounds like hard work. And essentially it can be. The hours you put in allow you to earn money. Depending on the type of work you do, you typically get paid a certain amount of money. Hours for Dollars. The top athletes in the world work hours for dollars, but they can earn ridiculous amounts of money. Lionel Messi earns around $126 Million Dollars a year. But the average person with a good job will earn around $25 000 to $100 000 per year.

Typically, this type of work means you hit an earning ceiling. You can only work so many hours a week, so you can only earn so much.

Examples of Active Income

  • Salary: Work from 8 – 5 each weekday, get some holiday. You are trading your skills for money.
  • Hourly Wage: It’s often not set hours. You work when you can, or when needed. The benefits here are you can earn overtime and work in shifts.
  • Commission: These are typically sales jobs. Often you can earn a small basic salary, but the true benefit here is that the better you perform (more sales), the more you make.
  • Tips: These jobs offer the ability to make tips from assisting others. Delivery’s, waiting tables, and car guards fall into this category.

Passive Income Meaning

So how can you get more?

Wikipedia defines passive income as follows:

Is income that requires little to no effort to earn and maintain. It is called progressive passive income when the earner expends little effort to grow the income.


Passive income means that you are receiving a consistent amount of money for doing nothing! Sounds good right? But life is never that simple, there simply is no such thing as a passive income that did not start without action! And even a so-called passive income will require your time, some of the time. It may take years to truly start to be passive.

Examples of Passive Income

  • Dividends from Investments: Typically, a bought passive income. You can accumulate shares over a long period of time or a one-time lump sum. If you can invest 5 Million Dollars over time, you could get around 5% per annum and make 25k per year.
  • Affiliate Income: This is online marketing. Typically, you will build an email list through online adverts or SEO and then provide value and offers to the list. This can be easily scaled once you have a recipe that works.
  • Rental Income: If you have the means or the money, you can acquire a property and rent it out to a tenant. It often requires money upfront, but there are some tricks of the trade that can give you no money down deals.
  • Courses: The nice thing about a course is you write it once and sell it many times. If you pick the right topic for your market, it can sell for years beyond the work you do up-front. This can also be done by getting the services of a facilitator or you can put it online of course!

Is Passive Income better than ordinary income?

Well, the short answer is YES! Who does not want money coming in while you are doing nothing? But just remember that you always need either time or money to build a passive income. They also do not just grow overnight.

Freedom through Passive Income

There are 3 types of freedom.

  • Time freedom: Being able to decide each day exactly what you want to do this second, minute, or hour. If you decide you want to go to a movie at 11:00 am on Monday morning, you do it.
  • Location freedom: Being able to decide where you want to be today. If you decide you need to visit a friend in Tokyo, you get on a plane and go.
  • Financial freedom: Being able to pay for anything you desire and not think about the cost. Look at the menu and decide you want the lobster (SQ)

To be honest, financial freedom will probably get you all the freedoms you want. To be financially free, you only really need to earn $1 more than your expenses in passive income.

How do we do this?

A coach of mine once told me to throw a pencil on the ground. After doing so, she said, “Oh no, you missed”. When I said, “But you didn’t tell me where to aim” she proceeded to tell me “That’s the point! If you don’t know the target, you are unlikely to reach your goals”.

So, pick your number; how much money do you need each month in passive income to live the life you want? When do you want to be earning that?

Let us say the number is $15k per month in 5 years from now. There is your Target, now all it takes is planning.

Which passive income model suits you best? Which ones can you see yourself doing? Then find someone who has already done it. Follow them and immerse yourself in the work. Learn everything about it, and just do it.

It may take time in the beginning, but in the end, it will be worth it.

If you need more assistance with how to get stuff done, visit one of my other blogs here “DMO – Daily Method Of Operation”

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