I find myself in a position where ever increasing expenses have drastically affected my personal supply and demand curve that is, the available supply (my income) does not meet the increasing demand (my expenses). As I considered various ways and means of generating additional income to meet this ongoing demand, several options became clear. I could look into selling some gently used items that were of no use to me but were taking up space in my house, which, at best would be a temporary solution a one time fix. I could get a part time job although I am less than enthusiastic about going back to work after working a full time eight hour day. Finally, I could explore the possibilities and advantages that producing passive income provides. Passive income is money that, once received, and with little or no effort on the part of its investors, generates income. Simply, it is an opportunity for the individual to let money work for him or her instead of the opposite. The greatest benefit of this program is that I would be able to effectively and efficiently manage and enjoy my free time to best serve me and my family. Lets also not forget that earning passive income can result in more favorable tax considerations than earnings received through active income.
The decision to create a strategy that will ultimately generate passive income is primarily dependent upon your financial aspirations, the skills and/or talents you plan to utilize, and the personality traits you possess that will prove to be an asset towards advancing and securing your financial goals. There are generally two types of passive income that which requires capital at start up and that which requires no start up capital. Examples of capital start up opportunities include funds acquired from investments, income generated from bonds and CDs, and money borrowed from friends, family or a lending institution. In contrast, passive income does not require capital and typically utilizes assets and/or royalties generated from book sales, song sales, patents and trademarks as well as income or commissions generated from Internet related sales and marketing activities.
In short, if you are envisioning passive income as a quick get rich scheme, you will be sorely disappointed. Although initial efforts can be rewarded with incentives that meet immediate short term financial goals, it is best thought of as a strategy that motivates one to pay today with the promise of a more secure standard of living in the future. Needless to say it is actually an incentive to pay today in order to play tomorrow.