Active and Passive Income - Which Is Worth More

I know I go on a lot about the importance of having assets that make money and create wealth for you without you having to be involved in the value exchange – the earning money bit - because this is the only way to have freedom.

This is what is called PASSIVE INCOME. 

I’m banging on about this because I still see so many people believing they should focus their energy on increasing their active income, believing this will solve their money problems, at the expense of creating wealth generating assets.

This video explains the difference between Passive and Active Income and why you should be waking up each day excited to create assets that earn money for you rather than thinking how you can earn more.

Watch the video now…

Now that you’ve watched the video I thought I’d add a bit more juice to the argument – not only is having passively generated income the only way you will ever be able to free yourself from the rat race BUT…

Passive income is worth more than active income 

… $ for $, £ for £, € for €, rand for rand

As you now know, active income involves you in some way and because of that it has a whole bunch of costs associated with it.

Us humans are “heavy on petrol” as they say! 

Let me show you why.

When you earn income actively there are a whole bunch of direct costs like travel to get to the place you earn the money, food, clothing, make-up, and you pay taxes on this income too.

There are indirect costs too with earned income. 

For example you may have to live in a certain place to be near employment when given the choice you could live in a far less expensive (and probably more pleasant) home and environment if you didn’t have to earn this money.  

This is before we have even added in the cost of your time, the lost opportunity to be doing the things you actually want to do and to get more value from your life because you have to use this time to earn money. And what about the stress?

You get it – active income comes with a whole bunch of costs which eat away at the amount you actually get to use.

Now to our much loved passive income.

• No special hair care product and perfume needed by the online systems that run your digital product business.
• No gluten free lunches to keep the email delivery software running.
• No Hawaiian massages needed to get rid of the stress. 
• No transport costs, no holidays, no food, no housing, no clothes…

The best is still to come...

When you have a whole ocean of passive income created by multiple streams flowing in, you can live anywhere you please! 

You are no longer tied to one particular place because that’s where you need to be to earn money.

• Where would you live if you could live absolutely anywhere?  How much could you reduce your cost of living if you moved somewhere else? 
• Would that lower your Financial Freedom number and make your time to freedom even faster?
• Would you have a number of homes to live between? 
• Would you be in the mountains in the summer and on the beaches in the winter? Or visa versa if skiing and sun burn are your thing.

Perhaps you’d choose not to have a home at all and just hop from one cruise ship to another.

The point is… 

… passive income gives you freedom of choice to do 
whatever blows your skirt up! 

Sure there are some costs associated with some passive income as you still need to pay taxes, but these are significantly less than the heavy cost burden loaded onto active income.

I hope this has gotten you thinking and falling in love with passive income even more, and hungry to create your passive income streams.

Big love

Ann