The following is a guest post from John Schroeder who regularly writes for his blog PassiveFamilyIncome.com.
Are you looking for ways to make your life simpler? If you are like most people, then getting your personal finances under control would go a long way to improving your life. Paying for monthly expenses, managing your career, and saving for retirement are just a few of the financial issues that ordinary people face every single day.
So what are some ways that you can fix your personal finances to make life easier? Get a second job? Cut your expenses? Downsize your home? These are all ways to help out with your finances, but are only short term solutions that require personal sacrifice.
There is another option however that does not require as many personal sacrifices and is often referred to as passive income. While the term passive income means many different things to different people, there is one common theme that is agreed upon. Once a passive income stream is created and begins earning money, there is little to no ongoing effort on your part.
If you are interested in learning how creating passive income can help you simplify your life, please take a look at some reasons listed below.
1. Automate your Personal Finances Using Passive Income
Building recurring income streams can help you automate your personal finances. Since a passive income stream does not require a lot of your time once created, it is a natural way to start automating your finances. If you have a passive income source that brings in money each month, think about ways you can use that income to automatically pay one of your expenses. This is a perfect opportunity to pay off monthly expenses like car payments, cable and phone bills, just to name a few.
Think about how much time savings and satisfaction you will get if you can automate just a few of your monthly expenses? This will make your life so much simpler!
2. Healthy Living
One of the best ways to simplify your life is to live a healthy lifestyle. Getting the appropriate amount of sleep, reducing stress, eating healthy, and frequent exercise are all activities that will make you healthier. As a result of living healthier, you can lower medical costs and avoid unnecessary doctor’s office visits which have a positive impact on your life. In addition, the healthier your are the more productive and efficient you will be.
The direct results of building passive income is one way that you can live a healthier life. The time savings (once an income stream is setup) benefit of focusing on recurring income streams make them well worth the effort. Having additional time in your day will allow you to exercise more often, eat healthier (as you have more time to cook), reduce stress (from the daily grind), and much more!
All of these health benefits as a result of creating passive income will make your life simpler.
3. Pay off Debt
Do you carry a lot of debt? Maybe you have that lingering car payment that you would like to get rid of but just can’t come up with the extra money to pay it off? Creating passive income streams is one way to pay off those recurring expenses every month without any worries. The first step is to identify monthly bills that you would like to automatically eliminate from your budget.
Once you have identified a monthly expense you would like to pay off, go out and build a passive income stream that brings in a monthly amount that can cover your expense. Don’t think this is possible? I can tell you first hand that this is how my family pays for our monthly car payment. A portion of our recurring monthly passive income covers our vehicle expenses every month!
4. Build Your Savings
Having adequate savings is important for any family. Establishing multiple income streams provides an opportunity to build your family nest egg. In the event of a family emergency, job loss, or other unexpected expense – a solid savings can really ease the pain of your hardship.
So how can you build your family savings? You guessed it – by creating passive income streams! Think of how much easier your everyday life would be if you had an automated process to consistently build your savings over time without worrying about it.
5. Start Donating Money
Many times in life I have found that giving can be much more rewarding than receiving. Are there local charities that you want to donate to but just can’t scrounge the extra money? Using passive income to donate money is a great way to give back to others who may be less fortunate or down on their luck.
Donating to others is a very rewarding activity. When you see others struggling to eat or find shelter everyday, it can really put a new perspective on your life. If you are looking to step back from the daily hustle and bustle, then donating to others can help you to simplify your life!
It takes time and work
Creating passive income is no get rich quick scheme. While it can really help you simplify your life by helping your personal finances, it still takes time and work to establish solid income streams. If managed properly, the income generated from these types of sources are well worth the effort.
Note from Bob: The hardest thing about building a passive income stream is getting started. For me I have found that writing for Hubpages and other similar sites is one of the easiest ways to get the ball rolling. Lots of people like to rent out real estate (for a positive cashflow) or receive royalty payments from writing books, songs, or selling photography.
{ 11 comments… read them below or add one }
This is a must read for anyone who is looking to simplify their financial life. Having passive income is key and something many of forget about. Passive income provides you the additional cash flow that is needed to live the financial lifestyle you are looking. GREAT POST.
I agree totally. That is why we recently started our part time business. We have realized that our income will stop when we can no longer work. Our 401k may not be there, and Social Security is not only insecure, it is a death sentence. So we started looking around for what we could do to build a passive income and honor God with our time and treasure. We believe that we have found it, and are having a lot of fun. We hope you will check it out!
Great post, John. The web has made it so easy to generate some additional income beyond day jobs. Another site similar to Hubpages is Mahalo. The whole idea of user-generated content allows people to earn money just by being experts in one area. Very cool!
@B Simple – I appreciate the complements about the post. It was a pleasure writing this up and I thank Bob for agreeing to publish it here.
@Gary – Thanks. Best of luck in your business. I agree with you about social security. I tell my wife the same thing everyday not to plan on it when we retire.
@Andrew – Thanks! I have been focusing a lot of my time on eHow but have gotten a little fed up with their practices. I will have to check out Mahalo.
to increase passive or otherwise income, i have started a business (which is not in its profitable stages yet but it is getting there…fast). I am also looking into good index funds that super investors highly recommend for individual investors with a long life of investing ahead of them. I am also aggressively increasing my financial education so that i can get the skills to make money so that even if i happen to loose some, i will still have the ability to make more instead of waiting for the winning lottery number or for some rich uncle to give me $1billion
etc
You know…I really want a passive income and there are many things I have tried to do (read MLM) in order to get something going without any avail. Do you have a list of resources or ideas to get us thinking about ways to generate a passive income (without the hubub of MLM)? I really enjoyed the post and it re-kindled my desire to go out and make a passive income work. I know it is not a quick thing, and it takes time and work put in to get a result, but I was a little down in the dumps from being burned on past experiences (read above)
Anywho, I am off to go gorge myself on data from the PassiveFamilyIncome site. WOOHOO!
Passive income would be ideal. Today’s world it almost seems like 2 steady incomes is not enough. Having a little bit of side passive income allows you to have some side money without putting much effort in. The initial hard work hopefully will help pay off. The internet is great for this.
I really like the balanced approach. I used the passive income technique with real estate and it gave me the time to spend with my family, exercise and the additional funds to give to charity. Having enough passive income that it meets and exceeds your bills give you the most important thing…freedom.
Stephen it’s interesting you say investing in real estate which is the most common and traditional format, I personally will be getting into to in the near future.
But, I actually even heard that some people are trying to use article writing on revenue sharing sites as a way to generate a passive income. For some it they are doing very well. What are your thoughts about it?
If anyone is interested and becoming a member of a revenue sharing site, check out http://www.theprospermagazine.com/write – its a place where Christian entrepreneurs to fellowship, collaborate, share insight with one another and earn money.
I have found that the most profitible form of passive income is through real estate investing. Bought properly, a piece of real estate can make you money 6 different ways.
After 10 months of promoting my blog, and having some success with it, I’m finally looking into other streams of income. Writing posts is far from passive, next I’m thinking about setting up an affiliate site or possibly drop-shipping.