It’s a common trope in society: the wealthier you are, the less work people think you do. You see so many images of wealthy people living a jet setting lifestyle, driving expensive cars, and taking vacations in exotic locales that it’s easy to forget all the hard work that went to getting there. Being able to live such a lifestyle is the consequence of wealth, not the cause. A 45-year old sipping martinis on a beach in the Bahamas didn’t get to that point by lounging around on the beaches all day.
A standard income might be fine, but it will never buy back your time and freedom
With that said, you can’t really blame people for wondering how they manage to maintain their lifestyles in spite of doing so little work. The real truth behind it is that they have done the work. The thing that distinguishes them from everybody else is that they have spent years building and curating all of their sources of passive income. If you are unfamiliar with that term, it means exactly what it sounds like: income that doesn’t require you to actively pursue it.
Wealthy people understand that their time is limited – Bradley Sugars lays this out quite well in his newest book The Wealth Coach. As he puts it, “A standard income might be fine, but it will never buy back your time and freedom.” Look around you, and you will see this to be true. How many people do you know pull seemingly high salaries, only to be miserable because they never get to do anything with their money? You can always trade time for money, but you can never trade money for time. Understanding and leveraging passive income is the key to getting the most of your limited time.
Passive income is the end result of building wealth. Don’t be mistaken – your initial sources of income will almost certainly be active. The trick isn’t to avoid active sources of income, but to use that active income to work towards developing passive sources of income. When you have passive income, the only time you spend is in maintaining that income, or bolstering it further if you so desire. Think of a famous author or musician – how many times do they write their songs or books? Only once. But guess what – they continue to earn money off of it forever. Their initial investment in time is to secure a much longer-lived source of passive income.
Owning a business operates on a similar principle. When you first open your doors, you are living and breathing a life of work. Smoothing out your operational procedures, securing a stable customer base, and training skilled employees to do your job takes a lot of time. What eventually happens, however, is that you can eventually begin delegating these tasks to qualified people. Your direct involvement in the business’ affairs declines, and you transition from working in the business to working on it. Working in the business is a full-time job. Working on it is typically not. When you reach this phase, your business will become an asset that feeds you and provides you with passive income.
Writing books, composing music, and owning businesses are just a few examples of the limitless sources of passive income that exist. Attaining passive income via traditional means (property, stocks, businesses) is a totally valid route, and many wealthy people maintain their net worth through these methods. The great thing about passive income, however, is that you can get really creative with the way in which you attain it. Famous Youtube videos, selling advertising space, licensing a design or piece of artwork to a business – the ways in which you can sell something again and again are only limited by your imagination.
Building passive income is all about leveraging your time and money. You need to spend money to make money, and you need to give some of your time to get it back later on. How you use your time and money will dictate how much you need to keep spending in order to reach and maintain your desired lifestyle. If you wish to work fewer hours, start leveraging the money and time you have towards building a portfolio of assets that will generate passive income. Live within your means, and above all, put forth as much effort as it takes to make it happen! The 45-year old lounging on the beach might have spent the first twenty-five years of their adult life working 75 hours a week to retire when they did. If they can do it, so can you.