This is income that is generated for a lifetime through means other than your employment. This could be through vehicles such as rent from property you own, royalties from intellectual property or even dividends that come from shares.
Passive income is extremely beneficial as it will come whether you are sick, on holiday, temporarily incapacitated etc.
The main problem with our lives is that many of us can only survive between one paycheck and the next, meaning that if we lost our jobs we could only survive a total of 30 days (that is, if we were truly independent!)
The actual definition of wealth, is the number of days someone can survive without earned income, i.e. the number of days from your last paycheck!
With most people they can only survive 30 days before; rent, credit cards, school fees etc are due! So if you lose a job…you are pretty much in trouble!
The truly wealthy people of the world understand the need for passive income and therefore invest in property which gives them rent income, intellectual property which gives them royalties for ideas, dividend income which gives them money from shares, businesses you own (but not run) etc.
Passive income derives its name from the fact that these income types are passive… i.e. they do not require your involvement except in the initial startup.
Large one off payments of money will do you no good in the long term as so many of us will find that we are too accustomed to spending and easily find the money has been spent on needless items! Have you ever noticed how many people that win the lottery are broke within two years! Yet the ones that make it for life are those that have growing multiple streams of passive income.
The trick to becoming financially free is slowly growing your passive income to surpass your monthly expenses and then you are wealthy, as you can choose to work or not!
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