What is Passive Income and why it is so important?

There are two types of income active income & passive income, active income is what we earn through our activities like jobs or business and services while later one is the source of income in which no physical involvement is required, even if you are at your home or on leave or 

Renting out your property like a home or car to someone, you will get the rent amount passively without doing anything wherever you are, which is a good example of passive income.

Why Passive Income is so important?

We are aware of the fact that Inflation is increasing day by day, unlike our earnings. In this scenario, a middle-class family is trying to survive in their daily life. So we should generate multiple sources of passive income and try to increase our savings and reduce our costs as much as possible for a better future.

Passive income gives you reliance, financial freedom, financial stability, availability to do other work, pre-retirement, and freedom from stress in your life. You need not take the burden of work because money works for you while you are on vacation or even when you are in the worst situation in your life.

Here I will discuss ten important reasons why passive income is important and can play an important role in your life:-

1. Earning on auto-pilot mode

When you generate sources of passive income, your income will be generated on auto-pilot mode i.e you need not actively do anything while money works for you. Recurring revenue will be generated from your passive source of income. 

For example, if you buy shares or bonds of some big companies then you need not do anything once you bought, it will give you a periodic passive income in the form of dividends or interest.

2. Allow financial freedom

Those who, have more funds & investments that meet all of their personal, as well as family requirement as per their luxurious status, can be retired at an early age in life, which is also called financial freedom. Financial goals can be shorter or big depending on lifestyle and family status. 

In the same way, passive sources of income provide financial freedom and allow you to retire early.

3. Time-saving

I think everybody knows the value of time, those who understand the value of time now he is more successful & rich. So we can not west our precious time, we can measure our time in terms of money i.e ‘time value’. 

If you study the biography of famous personalities like Elon Musk, Steve Jobs, Jeff Bezos etc. you find one thing common, they never west their time.

Through sources of passive income, we can pay off all of our recurring requirements & liabilities and the time you saved can be utilised in some other activity to generate further revenue or paycheck.

4. You can do what you love

As we discussed above passive sources of income save precious time, now you can invest your saved time in your passion that you love, it may be like learning some skills, techniques, & qualities which will grow your passion. 

5. Reduce stress & burden in life

Most people nowadays are suffering from financial stress & burden, and their paychecks are not sufficient to pay back their credits and liability. If your liability and expenses are more than your income then it will be a burden on your life. While a passive source of income protects you from this type of financial stress.

6. Wealth & happiness

Extra income brings prosperity and peace into your life, most of the differences in a family generally exist due to lack of money almost, it's common in every lower-middle-class family.    

7. Quality time with family

Suppose if have created lots of passive sources which will give you a handsome earning every month, you need not depend on your paycheck,  you need not go for 9 to 5 on daily basis, and you need not follow the instructions of your boss then you will able to spend lots of time with your family. 

You will be able to develop a good relationship with your family.

8. Freedom to move anywhere

Those who are doing 9 to 5, can not go on vacation or any family trip unless getting leave from his/her employer, a insecurity of job loss always exists in mind. You will not be flexible to move anywhere due to your job or business. 

However the passive source of income gives you full freedom to move anywhere, your earnings will be generated even if you are on leave or anywhere. 

9. Not to depend on pay-check

By getting income from passive sources you will be able to fulfil your financial requirements even if you have been fired or resigned from your job because you will not be dependent on your paycheck. 

You can save your all paycheck amount which will be an investment opportunity for you.  

10. Stops calculative life

We can't predict anything in our life, when an accident may happen we never know, even if we have calculated or planned everything which will or may happen in our coming future journey.  Unfortunately, an uninvited big accident may break our all plans and calculations. We can protect such types of unfortunate by generating passive sources of income. 

Conclusion 

Hence if want to be successful in your life, you want to be financially free an early age, you want to spend quality time with your family, you want to spend a wealthy & peaceful life, and you want to not to depend on your paycheck and you have a great dream like a rich & wise person then start to create passive sources of income from today, and start investing to get passive earnings.

If you study the journey of millionaires & billionaires you will find they are financially free from an early age. They have generated lots of passive sources which give them recurring income passively. 

I want to know your opinion about this article and how you thought about it. Please leave a comment.