This question was submitted by one of my good friends Cody and I immediately knew that I had to write about it. This is one of those questions that everyone has asked themselves. No matter how much you love your job there’s just some days when your not feeling it. According to this Forbes article, 70% of people are not engaged with their work. These are the people that may be constantly asking themselves this question.

The truth is that you need to make money work for you instead of constantly working for money. If you make your money work for you then you can literally make money while you sleep! Let’s take a look into the difference between active income and passive income.

Active Income vs. Passive Income

Active income is what the average person works for every day. Active income is income you receive for performing a service, for example the 9-5 job you go to every day is active income. The majority of people are only making active income which is why they are not able to make more money and work less. Think about it this way, you have to directly be trading your time for money. So if you don’t show up for work constantly, you aren’t going to get paid. 

Passive income is when you make your money work for you. Meaning that you are making money by putting in minimal to no work at all. You do not have to constantly be trading your time for money. There may be upfront work, but once you put that in your money will grow without you needing to constantly work. Passive income can be obtained through a number of ways some include side hustles, stock investments, and real estate investments.

Now that you understand the difference between active and passive income, it should be clear that it is near impossible to work less and make more money with active income. Even as you climb the ladder at your 9-5 and receive raises, you will likely also get more responsibilities. Thus your focus should be on how you can increase the amount of passive income streams that you have. In the following paragraphs I will discuss some of the passive income streams that you can implement to increase your income and decrease the time you spend working.

Side Hustling

For those who don’t know, side hustling is when you work outside your day job to bring in more income. For example if you own a lawn mower and tell your neighbors that you will mow their lawn for $50 but then hire a young high school student to do it for $30, you profit $20 without having to do much work at all. 

Side hustling is an ideal stream of income for many reasons. You are not only creating another path to wealth but also hedging yourself against any risk from your other forms of income. For example, if you get laid off from your 9-5. If you have side hustles, you will still be able to manage while you are applying for new jobs (or who knows, maybe your side hustle will become your full time job!). 

Let’s go back to the lawn mowing example. Your mowing your lawn one day and realize that your neighbor’s lawn is overgrown, so you head over to their house knock on the door and offer your services. Your neighbor is pleased with the offer and accepts,. After the young one you hired did a great job with your neighbors lawn, she recommends you to her friends in the neighborhood. You are now building a client list, and every weekend you have more lawns to mow.

Soon you get to the point where you need to more employees to assist you. You can get your clients and employees on a schedule in order to automate your business and you have now turned your working side hustle into a passive income stream. At first you may need to put in extra work but eventually you will be able to automate this hustle, and who knows it may be lucrative enough that it replaces the income from your 9-5.

There are so many side hustle opportunities out there just waiting for someone to take them. Be that person, get in the right mindset and start a side hustle.

Stock Market Investing

When it comes to investing in the stock market there are a number of strategies and a lot of it has to do with your personal risk tolerance. That being said, before you begin investing in the market you need to understand what your investing goals are and how much risk are you willing to take. One piece of advice is to never invest money that you are not willing to lose. Investing in the stock market is not a guaranteed way to make money and you could end up losing your investment.

Many people who are not familiar with stock investing believe that you have to do a bunch of research and invest your money in stocks of single companies. But wouldn’t it be nice if you could invest your money and own a piece of many different companies? Well this is an actual option and is also the most reliable way to invest and receive similar returns year after year. Instead of investing in a single company, try investing in an index fund that consists of many companies. For example the S&P 500 index fund is made up of 500 of the best large-cap companies. According to investopedia, the average return from the S&P over the last 90 years is 9.8%. That being said if you invested $1000 you could expect your investment to grow to $1098 in year 1. If you assume consistent returns of 9.8% then in 10 years your investment would have grown to $2,547 and in 20 years it would be worth $6,487.

This is a great way to make more money and can eventually lead to you working less and living just off your stock investments.

Real Estate Investing

Real estate investing is a great way to create passive income, though be careful because many forms of real estate investing are not passive. Like stock investing there are a number of investment strategies and styles for real estate. A more passive form of investing that like to focus on is rental properties. This is when an investor purchases one style of property such as a single family home, multi family home or even commercial buildings and rents it out in turn. You can even hire a property manager to do all of the work for you so that you are completely hands off. 

Rental property investing is a solid stream of income because not only are you receiving cash flow through rents, but houses tend to appreciate over time which means when and if you decide to sell your property you should be able to sell it for more than what you bought it for. Please note that this is not always the case, however it occurs more often than not.

If you are interested in real estate investing I would recommend checking out BiggerPockets to learn more about the subject, and definitely listen to their podcast, as well. Gina and I are huge fans of BiggerPockets and we have learned so much about real estate through their website.

Closing Thoughts

The key to increasing your income and working less is to create passive streams of income. Side hustling, stock investing, and real estate investing are just three ways that you can create passive income. There are plenty of ways to make passive income, but in the end it is up to you to take action and make your money work for you. 

Let us know below what methods of passive income you are implementing today to get closer to your goals!