What’s the difference between passive income and active income?
And is active income really the best way to live your life, as in, have a real job and receive money for the hours you work?
I’ve seen so many people get confused about the 2 different income types and they don’t know which one to go for considering they are both good and have their own pros and cons.
If you’ve tried to figure out all the differences and which one is better for you, worry no more, because you’re going to find everything you need in this article.
What Is Active Income?
Active Income is the act of getting paid one-time.
It is getting paid when you do a service for someone, do some type of freelance work or work for an employer.
You do not get paid over and over again, you only get paid one-time for the work you do.
That’s the easiest way to explain it because it really is that simple and nothing extraordinary.
If you work a 9-5 job, you are an employee and you get paid for the hours you work and that’s it.
When you step out the door for the day, your income stops instantly!
Another example is if you’re a freelancer online and write an article for someone for $20, that is active income because you get paid for the work you do one-time.
Even if you’re a door salesman and get paid commissions per item or service you sell, that is active income because once you stop door knocking for the day, your income stops.
Don’t get me wrong, getting in the sales game is a good decision as there is a lot of money to be made there.
But lets not go off-topic.
Pros and Cons of Active Income
- Easy and quick money – Money is quick since you’ll receive your earnings not long after completing a service
- No qualifications needed – You usually don’t need any qualifications to get into a job. Although experience is recommended, anyone can find a job and start working almost immediately
- A vast amount of opportunities – In 2019 we have the internet available and various social media platforms. We can work as a freelancer online or even buy and sell things online. It’s all active income because you’re receiving money for your efforts
- Income is limited – You are basically getting paid for your time or service with active income. This means you only have 24 hours in a day like the rest of us. Your income is going to be very limited considering you can only do a certain amount of jobs in one day
- Growth is limited – Again, you’re STILL limited by the 24 hours in a day barrier. There’s not much room for growth. Sure, you can make someone pay you more and charge your customers more but money will still be limited
What Is Passive Income?
Okay, now this is where things get interesting.
Passive income is the one I love with a passion.
Passive income is the act of getting paid over and over again with little work required on your part, or in some cases, no work at all.
Passive income is when you have something set up that makes you money on autopilot.
Yes that is me, enjoying my day, relaxing on a hammock enjoying an alcoholic beverage while my websites make me money.
Some examples of passive income streams:
Creating a blog.
When your blog is gaining traffic from social media or the search engines and if your blog is monetized correctly, you are earning income PASSIVELY.
You are earning money over and over again because the internet never sleeps.
You want to know what my favorite passive income stream out there is?
It is RECURRING income. It is getting paid by one someone every month for a service or product they are using.
Now when you have 10, 50, 100 and even 300 people earning you $20 commissions every month, these soon start to add up to $5000 to $10000+ every single month.
Even if you don’t have a product, there is something called affiliate marketing which is selling somebody else’s product/service and earning commissions.
It is passive income since you’re earning money every month on autopilot.
Another example is if you own a product and you have affiliates selling the product for you.
These are just examples of income streams but there are literally thousands of opportunities out there, you just have to look.
Pros and Cons of Passive Income
- Income potential is endless – You can create one blog, you can create hundreds. You can create thousands of passive income streams because they make money on autopilot. It’s a game changer!
- You can take a vacation & get paid for it – The most amazing thing about passive income is that you can get paid for everything you do because your income streams are working for you. You can take a month-long vacation and get paid for it!
- You live life on your own terms – You are your own boss and can work whenever you want my friend. Because your businesses make you money on autopilot, you can literally work from anywhere in the world for as long as you want
- You work less hours – When you have your passive income stream set up, you can either leave it OR work on it every so often to ensure it stays making you money. But leave it for too long and your income will eventually diminish
- You have more time on your hands – Money buys freedom, that’s how it’s always been and always will be. You have more time to spend with friends and family, and most especially more time on yourself and doing the things you love. I cannot stress that enough
- It’s not for everyone – There’s a reason why everyone has a regular job, it’s easy and doesn’t take much effort. Creating a passive income stream requires months of dedication and hard work before you start seeing results for your efforts, and most people will quit in the first week
- It takes a long time to build up – Passive income is not instant like active income, not at the very start anyway. First you’ll be working for free just to lay the foundations and then eventually things will start falling into place
What I Prefer & Recommend
As you can clearly see, there are many differences between active and passive income.
Sure, passive income is not instant at the start BUT the rewards are much greater than active income.
When you work a normal job, you’ll be working the rest of your life if you don’t change something now and that’s a true fact.
Unless you can build some type of passive income stream, you’ll be doing the same thing until the day you die.
If that’s not a wake up call I don’t know what is.
If you haven’t already guessed, passive income is my preferred choice for the simple reason that opportunities are endless.
If you choose the active income route, sure, you’ll have money in your hand faster but the rewards suck and that’s all there is to it.
No wonder most of the world works a regular job, because it’s easy and doesn’t challenge anyone.
Be a true champion, buy more time for yourself and do something great while your here and I promise you you’ll think you won the lottery once your passive income stream starts earning income on autopilot!
Don’t know where to start? Wealthy Affiliate teaches you how to create your website, rank it in Google and make money passively, and it’s my preferred choice for anyone seeking this type of lifestyle!