Want to escape the paycheck-to-paycheck lifestyle? Here’s what you need to know.
A 10-year-old girl from girl from Australia is set to retire by the age of 15. Yes, you read this correctly (Don’t worry, I had to read it twice too). Imagine having the financial stability to be able to retire early. Well stop imagining because you can do it too and I’m going to explain how (PS: Maybe not as early as her though).
Passive income is one of the most talked about topics when it comes to personal finance, and there’s a good reason why. It can help you escape the paycheck-to-paycheck lifestyle and build your wealth.
What is passive income?
Basically, any money made in a way that does not require a lot of effort is referred to be a passive income. The idea is to have a consistent cash flow without having to work a full-time job every day or like I like to say it make money while you sleep.
In general, passive income can be generated by investing in particular financial products or by starting a business that, after an initial investment, begin to generate revenue without your involvement.
However, it isn’t going to make you rich fast, so forget about any get-rich-quick schemes you’ve heard about (*Cough*MLM’s & Pyramid schemes *Cough*). However, over time the constant cash coming in might add up to a substantial sum of money.
What are the benefits?
Passive income is one of the most effective techniques to boost your financial status. If you’re still doubting it, let me introduce you to my top 3 reason as to why you need to find a passive income asap.
1. Early retirement
I’m purposely starting with this point because I know most of us want to retire early. If you can develop streams of passive income, believe me your dreams of early retirement will come true (and sooner than you think!).
2. Improved financial stability
Financial stability is one of the most important milestones in everybody’s life. Imagine not having to worry about your financial situation because you are confident that if any disaster happens tomorrow your finances will still be stable. Having a passive income means money is still coming in. Knowing that you don’t have to work extra hard for every dollar you earn can help you make better financial decisions because you don’t have any financial stress. This increases your financial security and improves your financial consistency.
3. Freedom to achieve your passions
Having a passive income removes the stress of living from pay-check to pay-check. It is basically your ticket to freedom. Think of it this way, if you’re actively relying on your monthly income in order to make ends meet there’s a chance, you’ll get stuck in a job you don’t really like (Trust me, I’ve been there and hated it). Passive income on the other hand gives you options. If you develop a steady stream, you will not only achieve your financial goals, but you’ll also have the flexibility to take up the things you’ve always wanted to accomplish.
Passive income is said to be the greatest wealth generating tool. As we have seen there are a number of advantages you can gain from earning a passive income.