Just what is Passive Income?

How do you define "Passive Income"? While authoring our best-selling book Secrets to Creating Passive Income we wrestled with the exact meaning and definition of this phrase, and finally came to the conclusion that it can mean different things to different people in different circumstances. However, to avoid being vague or ambiguous, the following working definition handles most situations pretty well.

First of all, everyone tends to agree that passive income opportunities have nothing to do with a time clock. If you are making money by reporting to work at a specific time and checking out later in the day, all for a fixed amount of income, that's not passive. There's nothing wrong with eight-hours-a-day employment, passive income is supplemental, or ideally a replacement for linear, time-based income.

Someone once declared "I work 18 hours a day on my passive income streams, so I can make money while I sleep!" Well, ideally passive income keeps on keeping on even when you sleep, but it also ideally shouldn't be something you have to work so hard at! The core point, I believe, is that passive income opportunities should, by definition, involve skills, tasks, and efforts that you enjoy. A "job" may or may not be drudgery, but true passive income should be a joy.

Many sources of passive income are non-linear in a time and effort sense. If you have to double your hours to double your income, then there's a direct linear relationship between the hours spent and the income received. Passive income generally allows, in one way or the other, to increase your income in a multiplicative or even exponential way. As just one simple example, consider a piano teacher who teaches one student at a time and therefore earns a rather fixed income per hour of time spent. Perhaps that shouldn't be considered passive income. However, writing a book full of piano lessons and earning royalties, or perhaps being paid the big bucks to perform to large, paying audiences, are both "passive income" ways to multiply the income for a similar amount of effort.

You'll find many books on the market that basically define real-estate investments as passive income, without expanding into the multitude of other passive income opportunities all around you. Real estate income is okay, and for some it can be extraordinary, but it's not for everyone, not by a long shot. In our book we focus on the many, many other ways you can earn passive income. Many of these ideas can be started on a shoestring budget, and you'll surely discover something in our list of ideas that is fun and enjoyable for you.

Almost daily we discover new ways to make passive income, several of which we've put into effect, and all of which we've had animated and fun conversations about. Here on these pages our intent is to share many of these thoughts and ideas. We welcome your thoughts and ideas too.

Remember our new twist on an old bumper sticker saying... "The one with the most toys - gets financially free first!" We are all in this together, there's plenty for everyone, and we like win-win-win results! We are grateful for your following, and joining, us on this great adventure!