Now let’s talk about why having sources of passive income is
so important. The average person is not going to earn a huge salary. True, a
select few people do earn enormous salaries as CEOs or in other top executive
positions. Others may be in-demand consultants who can charge huge hourly rates.
For the majority of us, though, our income potential is not huge. We are limited
by our education, experience, and the number of hours that we can physically
(and mentally) spare for work.
Passive income opens up possibilities that might not
otherwise exist. It allows us to earn money in ways that do not require hours of
additional effort on an ongoing basis – and that’s huge. If you find that
working long hours translates to having only a limited amount of time with your
family – or that you’re passing up opportunities to do what you love – then
passive income can make the difference.
Passive income matters because it’s the kind of income that
can easily supplement your active income – and eventually, it may even replace
your active income. Your earnings with active income are limited based on the
number of hours you work, as well as by things like your education and work
history. There are no such limitations on passive income. You have complete
control over it, which means that nobody can cap it. The fact that you can earn
it while you are sleeping, playing with your kids, or on the golf course means
that you have the freedom to do what you please with your time.
As you can see, passive income does differ significantly from
active income. Money is money, but the money you earn from passive income
streams is the kind of money that can set you free from the daily grind and
allow you to pursue the things that are most important to you.
In the next chapter, we will talk about the benefits and
risks of passive income in greater detail so that you know what to expect as you
work toward setting up passive income streams.
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