#006: Selling Your Time for Money is a Bad Deal
Money is replaceable — time is not. Understand how to generate passive income ASAP.
Today, I am going to show you how to start generating passive income.
Most people agree that passive income is desirable however they lack the trigger or mindset to get started.
By understanding how passive income relates to your free time and that it only requires a habit to get started you can generate passive income with intention.
The problem is that most people never take a short moment to assess the impact of passive income on their future.
1. Understand your pain point
Moments, experiences, memories are not replaceable.
Money is replaceable — time is not. It is that simple.
We all know that. It it does not help much if I keep repeating one more time what is considered common knowledge.
However, here I am also presenting you a solution that you can apply for yourself to own more of your irreplaceable time.
Most of us are selling our time for money, which is fine — as long as you are aware of the tradeoff you are making.
Yes, it all starts with awareness. If you reached this point you are already on track to self-improvement.
After you gained awareness a shift of mindset will follow automatically: because if you recognized the “problem“, you can start thinking about solving it — otherwise you don’t.
2. Recognize that you want to solve the problem
The solution is generating passive income. That’s income generated without trading your time for it — as opposed to active income.
Passive income comes from owning assets.
Assets can be stocks, intellectual property, real estate, digital or physical assets (e.g. an old-timer car, a painting, etc).
If you own assets that appreciate over time then they can generate passive income.
So the question to answer is: how can you start owning assets?
3. Implement the solution
Follow these simple steps and you can start owning assets:
1. Step
Start reporting and tracking your monthly income and net worth. You can use my template described here.
2. Step
Now you are aware of your monthly savings rate. This is the amount you can use to save or invest in assets.
It is also the number you want to raise. By doing so you can invest more, own more, and in turn generate more passive income.
3. Step
Now you are also aware of how quickly your future is evolving. Study your own net worth, savings rate and project yourself 10 to 15 years into the future.
Ask yourself: Is this the future you envision?
Again, this is the moment to become aware of where you are heading for.
4. Step
You have done the part of financial self-reflection and self-assessment. To start generating passive income, ask yourself the following questions:
- Can I save (= invest) more money?
- Can I spend less money?
- Can I earn more money?
Probably you can answer questions a) and b) with “yes“.
Don’t underestimate the compounding effect of rigorous financial discipline.
If you save $50 per month after 1 year you got $600. That’s good money!
But you don’t have to be stingy. Instead, you can start spending with intention as opposed to living paycheck by paycheck
And remember: “discipline“ might sound harsh but it is nothing different than a habit.
We all have habits such as drinking a cup of coffee every morning after waking up.
If you have habits you can be disciplined.
Your future self will thank you.
Key takeaways
- Passive income means generating revenue without trading your time for it.
- Start reporting and tracking your net worth to become aware of your monthly savings rate.
- Aim for increasing your savings rate as it enables you to generate more passive income.
Don’t miss the next post where I will explain why you can become wealthier than someone with a higher income if only you manage properly your monthly savings rate.
