Once you’ve traded all your time, there’s nowhere to go. The trouble with trading time for money is that time is a finite resource - you only have so much time. Once it took off, my passive earnings far outstripped the money I made through conventional work (and I wasn’t poorly paid). In fact, you can maybe not just maintain your income, but possibly earn more, even much more than you did by working. An escape route where you can spend your life doing what you want to do, and still maintain an income. Passive income offers an alternative to this. Hopefully, they aren’t too old and tired to enjoy it by then.

And then, after 45 years, they can stop and do what they want for a bit. That leads to the sad situation where most people spend all their time doing a job they hate, just to be able to afford a life where they keep on doing exactly that. There are probably a thousand things they would rather be doing instead, but they have to work to pay the bills. So to maintain your lifestyle you have to keep working. The moment you stop working, your income also stops. In a conventional job, you have to put time in to get money out. It could perhaps more accurately be called residual income. But what it then gives you is the ability to de-couple your income from your time. Building a passive income stream takes a lot of work upfront. Not in the context that we’re talking about here anyway. It may just mean the freedom to work for yourself, when and where you choose. Whether that’s sipping cocktails on a tropical beach whilst working from your laptop, travelling around the world crossing off items on your bucket list, or simply raising your kids as a stay-at-home parent. Taken to the ultimate, you can potentially spend your time doing whatever you want, whilst your income still rolls in.

It offers the promise of being able to leave a conventional job, where you trade time for money, and enjoy a life of freedom to work when and where you choose instead. Passive income is money that still comes in when you are not actively working.

Passive income definition