I don’t know about you but I value my time very highly, even higher than money. While money is unlimited, time is limited so holds a greater value. My day job takes up the majority of my time and I don’t particularly enjoy it. But what makes it worse is that it gets in the way of doing what I love, spending time with family, seeing friends, playing sports, traveling the world. What if I could do what I love to do and make money at the same time? This is where passive income comes in.
Passive income gives you back time to spend doing what you love. It’s not about the money passive income provides, it’s about the freedom that passive income provides. The freedom of time. Plus, your mind will be free of stress and worries that come with paying bills.
Freedom of Time
There is so much that I want to do in my free time, I just don’t have the time to fit it all in. I want to spend more time with my family and friends. I want to spend more time travelling to exotic countries. I want to spend more time on my hobbies such as drawing, playing tennis and even binge watching Netflix. The list is endless but I have to keep putting things off due to time or money constraints. I’m sure most of you are in the same boat and have things you are passionate about, but just don’t have the time of day.
Passive income provides you with financial security. You don’t need to worry about losing your job and struggling to meet expenses. Passive income streams will continue regardless and if reinvested, will generate more passive income. It is a continuous loop and one of the ways that the rich get richer. Albert Einstein famously said “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” Compound interest is result of reinvesting interest. It is the interest on interest.
Now I’m not saying it will solve all your problems but it can improve your mental wellbeing. The NHS website provides five steps to improving your mental wellbeing. Passive income provides you with more time to implement these five steps.
- Connect. You will have more time to spend with loved ones and developing new relationships.
- Be active. You will have more time to go to the gym, go for a walk, play tennis, whatever form of exercise you prefer.
- Keep learning. Always wanted to learn a new language? Well now you can.
- Give to others. Whether this is donating money or donating time, you will have greater capacity to do this.
- Be mindful. You will have the time to practice mindfulness.
The beauty of passive income is that once generated, it will require very little maintenance and you will make money in your sleep. But if you don’t have any money to start off with, a lot of time and effort will be required to generate passive income in the first instance, see my post on passive income ideas part 1. Alternatively, if you are lucky enough to have some starting capital you are already a step ahead, it will take less effort to generate passive income, see my post on passive income ideas part 2.
Why have multiple passive income streams?
If you only had one stream of income, what would you do if that one income stream dries up? For example, let’s say you are living off your stock market investments, withdrawing a certain percentage each year. If the stock markets crashed, you may be unable to withdraw as much money, therefore your annual income reduces and your quality of life suffers. However if you had a second income stream such as rental properties, you will continue to receive the rental income despite the stock market crash. Therefore the reduction in stock market income will have less of an impact on your overall finances. The more streams of income you have, the better.