Why do we all want to earn a passive income?
This is a commun trend, and I am definitely including myself in this. But hard work can be much more rewarding although it's rare to hear someone say "I want to work as hard as I can fo as long as I can".
Not sure of a distinct answer since there are so many people. My objective was something to supplement Social. Security. U.S, government considers retirement as being when social security is received . . . not work stoppage.
That begins at 62-1/2 with reduced benefits and 66-1/2 for full benefits. Passive income developed before that time offers a greater than the nearing poverty level retirement benefits from Soc. Sec. alone.
Today, the max for a person earning at max level since age 22 retiring (receiving Soc. Sec.) at age 62-1/2 is $2,000 or $24,000 a year. That is at 'max' earnings. Poverty level (2013) for 1 = $11,490. Yes, near double poverty level, however reality says difference does exist. Annual average cost of living varies between $28,000 - $50,000 in the San Diego area of Calif. for example for a family of two.
It doesn't add up on Social Security alone for the average of two career earners at average wages for the 40 year career receiving Social Security alone.
Because these day's nobody wants to work hard anymore. If given the option to make 50k/year in an oil field or 50k/year sitting at a desk, the average person will choose the desk. Our society these days is one of laziness - yes, we still have a large fleet of hardworking fellas out there busting their hump to create what we consume; but it's becoming more and more rare.
As for the passive or residual income - it's nice to have a few extra bucks every month, isn't it?
Because security only comes when your dollars aren't dependent on the hours you spend working. I am also working to build a recurring income, but will still work as hard as I can no matter how successful I get in achieving that income. However, I want the recurring income so that I can potentially work hard at other things -- charity work, or teaching my kids, or experimenting with projects that may not earn immediately (or at all) that I can't try right now because my hours have to be productive. On the same token, I want an income that will continue supporting my family even if I get sick or become disabled. More immediately, I'm building an income that can still keep the lights on and food on the table even if my clients don't have much work for me one month.
Perhaps some people do want it for luxury -- personally, I want it for financial stability and security, and for the ability to spend my time on the things that mean the most instead of pay the most.
I think the goal of earning passive income has the luster of earning steady money by not continuing to put forth the same effort.
There are many legitimate jobs that produce passive, residual or recurring income.
Writing is a great example. I write something once, and the more it is viewed or purchased, the more money I get without writing any more. If I do write more, the idea is that it compounds on top of my previous writing, it is not simply doing more work for the same pay I was earning before, it is adding to it, increasing my pay, and I think that is the attraction.
The problem is many will not stick to it long enough to see the best results, which come later, much later down the road. I think a numbers example helps the best.
What if I Told you that if you worked for 30 minutes a day, I would pay you $0.01? and for every 30 Minutes you worked I would increase your pay by $0.01? Now that sounds like a horrible deal, but lets let the numbers play out.
at the end of 1 year, your pay will be a measly $3.65 per 30 minutes, but you would have earned $660.66.
year two, you guessed it, your pay is $7.30 per 30 minutes, but guess how much you have earned total in two years? $2,668.15!
you can see that if we keep going with this, how significant that adds up. and that is only adding $0.01 per day to your total.
That is what is so attractive about passive income. with regular work, you work an hour for a wage, and its the same wage. with residual income, your work is added to your past work, and the idea is to increase that earning over time putting in the same work.
So if you can stick it out, and work hard(yes passive income does not mean easy income), you can achieve the passive income goal!
I have written a good amount of articles on the topic and on personal finance in general, so go check them out to learn more.
I would like to earn a passive income because it would give me freedom. I would be able to live my life and pursue my passions. Knowing me I'm a workaholic so I'd still find a way to work to some extent but earning a passive income would be a blessing.
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