What is Passive Income?

graphic showing how to achieve passive income with coins
How can you create passive income.

So what is a passive income? A passive income is an income that requires little or no effort to maintain, almost self generating in a way. Passive income can trickle in, when you’re not working.

Whenever someone needs an additional income, usually the first reply is “get a part time job or do some overtime.”

But what happens if you don’t have any more time to put in some extra hours? This is where the magic of passive income can help.

Active income versus passive income

Active income is where you are doing something in order to receive that income, like the usual 9 to 5 job. Passive income is where you might use very little or no effort to earn money.

Are you looking to make an extra income? Have you recently lost your job or are you looking to increase your financial wealth. Maybe your fed up with the 9 to 5 rat race and realised life is for living! Because you were born to live a life and enjoy it.

Two Ways To Generate Passive Income

Passive income doesn’t just magically appear, it still has to be generated from existing assets. No matter what form of income generating assets those are, you can only build them in one of two ways.

Passive Income 1: Investing Money

If you are lucky enough to have some residual cash (spare cash not needed for bills etc) then you can invest into something. These streams of passive income usually require little effort. Your money is working for you quietly in the background.


  • Interest from savings account
  • Income from investment property
  • Peer-to-peer lending
  • Sales from eBook online
  • Revenue from affiliate marketing
  • Sell your photographs

Passive Income 2: Invest Your Time & Effort

If you do not have any residual cash, then you will need to trade your time to build your passive income asset. There is a chance that you will need to invest a small amount of money to get started, but the main investment will be your time and effort.


  • Write an e-book
  • Affiliate marketing

Think of your income as a table, imagine a table with one central leg and another table that might have four legs:

The first table only has ONE LEG to support the table. If one leg breaks, the table COLLAPSES.

The second table has MULTIPLE LEGS to support the it. If one leg breaks, the table will wobble but REMAINS STANDING.

Think of the table as your LIFE and the legs as YOUR INCOME STREAMS. Set yourself up with multiple streams of income so that YOUR LIFE DOESN’T COLLAPSE if one fails.

Earning a second income will allow you to have more to potentially do what you want. You could always reinvest and earn a second income on you second income.

There is an old saying in business. Failing to PLAN is planning to FAIL.

Related: www.howtochangeyourlife.co.uk

Leave a comment

Your email address will not be published. Required fields are marked *