Passive income vs. active income: how do you earn?
Passive income and active income — do you know how these concepts differ from each other? Active income means exchanging your time for money. You work on a job and are paid for an hour, a day, a month or a job. In this case you get active income because you sacrifice your time and energy for a given time to get that income. This is the most popular model of earning among people and it has one big disadvantage — if you stop working then your income disappears.
This blog post answers the following questions:
- What is passive income vs. active income?
- How does passive income offer more freedom?
- What is a self-operating business for passive income?
- Why is online business more scalable?
- How can online courses generate passive income?”
On the other end of the scale, there’s passive income. I think this is the kind of income each of us should seek. Why? Because passive income allows you to scale your potential and multiply your income more and more. Passive income gives you freedom because it does not require you to be active to make money.
Do you want to earn well? Let’s say you earn very well as a doctor or lawyer. However, this requires you to work most days a week, often a few hours a day. What if you want to earn this way every month? Every day, month, year you have to work from morning to evening to maintain your earnings. With passive income, you become a free individual, able to lead a lifestyle that even those with high earnings (in the form of active income) will envy.
Passive income and active income — lifestyle matters
While earnings are certainly important, is it truly worthwhile to pursue vast wealth at the expense of working from morning to evening? Is it worth spending the majority of our time working in a place we don’t particularly enjoy? You have only one life, and perhaps it’s worth living it in an engaging and liberating manner.
It is certain that passive income and online business enable you to accumulate significant wealth over time. Nevertheless, I firmly believe that the primary advantage of online business and passive income lies in the freedom to travel, enjoy time with loved ones, be independent from a boss, and lead a fulfilling and joyful life. I prefer to have a passive income of $5 thousand per month than to earn $50 thousand per month and work from morning to evening without experiencing the joys of life.
Passive income is simply a self-operating business
Individuals with passive income essentially have a business that does not require regular work on their part. Every business requires initial setup, monitoring, and control, but once we no longer actively participate in it, it can be referred to as passive income. If we publish your own book on Amazon, for example, you create passive income from Amazon. Amazon works for us — by handling sales, payments, customer service, shipping, and handling complaints, relieving us from any further involvement. Our role focuses on product creation and marketing. This approach allows you to generate passive income. Naturally, it is necessary to monitor and support your books to some extent, as Amazon undergoes changes and competition arises. However, a well-executed product will provide us with a steady stream of passive income for years. See what type of online business is best for you.
Unlike traditional business models, online businesses and passive income have the advantage of easy scalability. This can be achieved by creating additional products and expanding the customer base, allowing for continuous growth. At the beginning, it requires significant effort and learning, but as time goes on, there is virtually no earning cap, particularly when selling Amazon products worldwide. That’s why I am a strong advocate of selling and creating even simple products on Amazon. With a target market worldwide, just 10 simple products can have a significant impact on the life of any individual.
What is my passive income?
I own over a few hundred products on Amazon and they bring me a pretty cool passive income. Some time ago, I showed what products I sell on Amazon and how much money do I make from it?
In addition to my passive income from Amazon, I have included income from the sale of online courses that further increase my passive earnings. Online courses are a slightly different type of passive income — but they require more attention from me. Books on Amazon require minimal maintenance as Amazon handles payment processing, printing, shipping, and even customer service. As authors, we receive royalties without the need for extensive involvement in the operational aspects.
For online courses you need to manage your store and ensure customer service, but they still offer the benefit of generating passive income through automated processes. In my case, there are also earnings from affiliates, which are also completely passive, because in this business model you receive a commission for selling someone else’s product. Want to know more? Sign up for my free Amazon and online business course today and find out what kind of business is for you.
Passive income vs. active income: which way of earning should you use? — watch the video
1
00:00:00,440 –> 00:00:04,657
Hi, I’m Tomek!
From Waiter To Millionaire. Welcome.
2
00:00:04,658 –> 00:00:08,313
Today, I’ll tell you about
passive and active income,
3
00:00:08,314 –> 00:00:11,643
what’s the difference
and why you should have
4
00:00:11,644 –> 00:00:15,180
at least a partial passive income
and how to do it.
5
00:00:15,200 –> 00:00:17,029
Let’s find out.
6
00:00:21,440 –> 00:00:26,020
I greet you from the Vistula,
a beautiful river in Kraków.
7
00:00:26,040 –> 00:00:28,443
Look on its beauty.
8
00:00:28,444 –> 00:00:30,929
Taking the opportunity
to be here,
9
00:00:30,930 –> 00:00:36,056
I’ll tell you a bit about active income,
but mostly about passive one,
10
00:00:36,057 –> 00:00:38,340
so that you know what it is.
11
00:00:38,360 –> 00:00:41,460
Let’s start from an active income.
12
00:00:41,480 –> 00:00:46,971
Active income is the income
you earn by your work,
13
00:00:46,972 –> 00:00:52,700
selling your time
and making money because of it.
14
00:00:52,720 –> 00:00:57,171
If you have a full-time job,
you perform a given task for money,
15
00:00:57,172 –> 00:01:01,729
that’s the active income –
you earn as much as you work.
16
00:01:01,730 –> 00:01:04,660
Most people earn money this way.
17
00:01:04,680 –> 00:01:08,528
It’s quite OK. There’s nothing
strange or wrong about it.
18
00:01:08,529 –> 00:01:10,380
It’s normal.
19
00:01:10,400 –> 00:01:12,856
So, what’s passive income?
20
00:01:12,857 –> 00:01:18,786
Passive income is the one that
doesn’t require our work and presence.
21
00:01:18,787 –> 00:01:23,140
That’s the difference between
passive and active income.
22
00:01:23,160 –> 00:01:28,056
If, for example, you’re
a doctor, a lawyer, a teacher,
23
00:01:28,057 –> 00:01:32,070
you work as a waiter,
you’re paid for your time.
24
00:01:32,071 –> 00:01:34,956
You earn as much as you work.
25
00:01:34,957 –> 00:01:39,971
You can earn a lot or a little,
but it’s still
26
00:01:39,972 –> 00:01:44,260
dependent on your time,
your presence at work.
27
00:01:44,280 –> 00:01:49,071
On the other hand,
passive income is the one that you earn
28
00:01:49,072 –> 00:01:52,871
from the things you’ve created,
like an online product
29
00:01:52,872 –> 00:01:55,743
or business not requiring your presence.
30
00:01:55,744 –> 00:02:00,740
Nowadays, it’s very easy to create
such a passive income.
31
00:02:00,760 –> 00:02:06,039
If you create an online product or
a business not requiring your presence,
32
00:02:06,040 –> 00:02:09,700
it’s achievable for everyone
to create such income.
33
00:02:09,720 –> 00:02:13,314
You may now think
“why should I create this income,
34
00:02:13,315 –> 00:02:16,171
if I have a job and earn a lot?”.
35
00:02:16,172 –> 00:02:19,971
Maybe you have a really good job.
36
00:02:19,972 –> 00:02:25,197
Now, the question is –
what lifestyle do you want to have?
37
00:02:25,200 –> 00:02:28,814
If you have a job
that you don’t like much,
38
00:02:28,815 –> 00:02:32,457
as I often hear that people
dislike their job
39
00:02:32,458 –> 00:02:36,519
and they go to it just because,
but they don’t like it.
40
00:02:36,520 –> 00:02:39,839
It’s normal.
I was also sick of my job not once.
41
00:02:39,840 –> 00:02:43,980
In each workplace I had a boss,
we were forced to be present
42
00:02:44,000 –> 00:02:46,860
while sitting and doing nothing.
43
00:02:46,880 –> 00:02:51,986
When it comes to passive income,
it’s all about a lifestyle.
44
00:02:51,987 –> 00:02:56,414
By creating passive income,
you earn and you don’t need to
45
00:02:56,415 –> 00:02:58,429
be present anywhere.
46
00:02:58,430 –> 00:03:03,528
I’ll give you an example of Amazon Book,
as it’s my topic of interest
47
00:03:03,529 –> 00:03:06,460
which I discuss a lot and teach it.
48
00:03:06,480 –> 00:03:11,286
If you’re releasing products on Amazon –
a book, physical products
49
00:03:11,287 –> 00:03:15,129
or online products, maybe
you have an online business
50
00:03:15,130 –> 00:03:21,856
or the one not requiring your presence,
then you can work from home.
51
00:03:21,857 –> 00:03:26,580
In your slippers, shorts, panties
or without them, if you prefer.
52
00:03:26,600 –> 00:03:31,199
The point is that you can be
your own boss – you make decisions.
53
00:03:31,200 –> 00:03:36,257
If you work efficiently,
you can work only for 2 hours a day.
54
00:03:36,258 –> 00:03:41,671
But you can also work for 8 hours
efficiently and multiply your profits.
55
00:03:41,672 –> 00:03:46,828
You can work while visiting your family,
being on a trip abroad,
56
00:03:46,829 –> 00:03:49,020
in Poland or by the river.
57
00:03:49,040 –> 00:03:54,439
That’s the essence of passive income –
it doesn’t require your presence.
58
00:03:54,440 –> 00:03:57,220
You work on your own terms.
59
00:03:57,240 –> 00:04:00,260
That’s why lifestyle matters.
60
00:04:00,261 –> 00:04:06,100
I would rather earn 2,000 USD
and work the way I do now –
61
00:04:06,101 –> 00:04:10,656
running a blog
or releasing products on Amazon –
62
00:04:10,657 –> 00:04:14,757
than earning 10,000 USD
and working 10 hours a day
63
00:04:14,758 –> 00:04:16,986
as a doctor, for example.
64
00:04:16,987 –> 00:04:20,814
I don’t want it,
because I can do what I want
65
00:04:20,815 –> 00:04:24,157
and that’s
the essence of passive income.
66
00:04:24,158 –> 00:04:29,100
As I’m recording this video,
taking a break by the river from cycling,
67
00:04:29,101 –> 00:04:32,780
I’m selling dozens of books
a day on Amazon.
68
00:04:32,781 –> 00:04:38,757
Maybe some are being sold right now
without my presence and effort.
69
00:04:38,758 –> 00:04:44,829
Amazon sells these books, creates
payments, takes care of a client,
70
00:04:44,830 –> 00:04:47,885
so this platform does all of it for me.
71
00:04:47,886 –> 00:04:52,039
I can go somewhere
and don’t worry about all this.
72
00:04:52,040 –> 00:04:56,442
While when working full-time,
you can’t go somewhere,
73
00:04:56,443 –> 00:04:58,780
you can’t even leave country.
74
00:04:58,800 –> 00:05:03,114
You’ve your hands tied –
for some people it’s not a problem.
75
00:05:03,115 –> 00:05:08,043
You don’t have to quit job,
but start thinking about a passive income,
76
00:05:08,044 –> 00:05:12,771
even after hours, on your own terms
while developing your hobbies,
77
00:05:12,772 –> 00:05:17,140
so that you stay in a full-time job
you like or change it.
78
00:05:17,160 –> 00:05:20,520
Maybe you can double
your income in this way
79
00:05:20,520 –> 00:05:23,614
and go on a trip,
buy a new car, whatever,
80
00:05:23,615 –> 00:05:28,657
but the point is to be independent
and diversify your source of income.
81
00:05:28,658 –> 00:05:34,871
That’s why I’m such a big fan of passive
income and earning money online,
82
00:05:34,872 –> 00:05:40,643
because it gives you a really nice income
and the one that can be scaled.
83
00:05:40,644 –> 00:05:44,013
Yes, you can make some money
in a full-time job.
84
00:05:44,014 –> 00:05:48,586
Opening up every business,
the online one too, you earn a little.
85
00:05:48,587 –> 00:05:51,614
But in time,
when creating Amazon products,
86
00:05:51,615 –> 00:05:54,885
they’re being sold,
you can create another ones
87
00:05:54,886 –> 00:05:58,699
and it requires just
your minimum attention sometimes.
88
00:05:58,700 –> 00:06:03,400
Once you have a lot of products,
your income will greatly increase
89
00:06:03,401 –> 00:06:05,271
without your attention.
90
00:06:05,272 –> 00:06:10,143
You can create a pile of products,
create a various source of income,
91
00:06:10,144 –> 00:06:15,742
as it’s possible online,
and you can scale this income very much
92
00:06:15,743 –> 00:06:19,900
in every business,
especially in the online one.
93
00:06:19,920 –> 00:06:22,900
In a full-time job you have a limit.
94
00:06:22,901 –> 00:06:28,886
You can earn 2, 4, 6, 8,000 there,
but in business or online business
95
00:06:28,887 –> 00:06:32,671
while selling on a global scale,
you can earn 15,000.
96
00:06:32,672 –> 00:06:36,286
That’s why I’m such a big fan of
online business –
97
00:06:36,287 –> 00:06:40,643
I teach it, it gives me happiness
and I’m passionate about it.
98
00:06:40,644 –> 00:06:44,759
If you’re interested,
be welcome to check my other videos.
99
00:06:44,760 –> 00:06:48,356
You can learn about
online business and motivation.
100
00:06:48,357 –> 00:06:53,319
Have a look at the Vistula.
We’re between Kraków and Tyniec.
101
00:06:53,320 –> 00:06:55,980
I’m here with my bike.
102
00:06:56,000 –> 00:07:00,479
It’s a beautiful evening
towards the end of May.
103
00:07:00,480 –> 00:07:06,200
I didn’t plug in the mic,
so that you can hear the background.
104
00:07:08,657 –> 00:07:12,986
I’ll ride towards Tyniec.
There’s a beautiful cycling route.
105
00:07:12,987 –> 00:07:15,743
Go there, if you live in Kraków.
106
00:07:15,744 –> 00:07:20,985
See you in another episode.
Like this video and subscribe, share.
107
00:07:20,986 –> 00:07:24,271
See you again on Friday, as usual. Bye!