Step 2: Income

TL;DR: Analyze your income streams and think about how to maximize. You can split the analysis into two types, active vs. passive.

For most of us, work as a source of active income is the main way we support ourselves. Once we get a job, we work like a zombie until we retire at 65, and for the median American/Canadian, we have no savings and then ask where our lives went.

The goal here is to make sure that doesn’t happen.

Starting at square 1: Getting a Job

Almost everybody starts here – getting a job where you trade time for money.

I won’t focus too much on this since this is not the point of the blog, but some points of advice:

  • Start thinking early about what kind of job you want. What qualifications like skills/education/networks do you need to get there? Is it worth it?
  • When you first start out, it’s a numbers game. Don’t get disheartened when you get rejected from your dream job – for the average person, you’ll likely find that your dream job was not that unique. Keep working at it and getting yourself out there.
  • In the end, getting a job is a matter of supply and demand. Figure out how much demand there is for someone like you (i.e. how many employers are willing to offer you a job and at what salary/benefits). Then figure out what skills you offer and how many candidates are like you and applying for the same jobs. This will put you in the best position to think about how to get the best job you can and how to negotiate. Unlike in economic theory, however, the real labor market has some quirks, mainly that most of the price (salary) info is not really public and you need to apply yourself to figure it out (e.g. applying to jobs and getting them).

A source of active income is the backbone of most people’s livelihoods. Keeping a job of some sort is likely a good idea for most people, but that doesn’t mean you shouldn’t think of how you can make your situation better.

Passive Income: Why it’s important

Ever heard of the phrase “Time is Money”?

This is kind of right, but I like to think of it as “Money is Time”. Because why do we want money anyway? Money for money’s sake is the definition of greed, and money for status would make me strongly urge one to at least re-examine what exactly that means.

For me, there are two things I care about. One is maximizing time well spent with loved ones in the luxury I desire. The second is time I’m able to put toward my other life goals now and in the future (e.g. philanthropic pursuits). These are what will make me happy at the end of the day. And when I frame things like this, one thing becomes clear.

Time is the real currency that is desired.

And in some ways, money can buy you time. Think about it, it can:

  • Literally buy you time if you can afford the medical attention you need when you need it
  • Save you time and headaches from worrying about things, like spending time to look for 50-cent paper coupons (because that’s not worth it anymore), or in the extremes, like worrying about housing if you can’t afford it
  • Hire help at work or at home for tasks so you can save time

And many other things. And with “passive income” if you can earn time (because money is time) without spending time, that seems like a huge win to me.

Passive Income: Ways to Leverage Yourself

Earning passive income usually means leveraging yourself in some way. There are three main ways to do it:

  1. Hiring people. This is the method that is as old as time. When you have a tried and true business model, for example, hiring someone to do the work that needs to get done is a way to generate passive income for you.
  2. Using money. Whether that’s in investments or simply in a savings account, money well-placed can grow for you without as much work on your part. Of course, you need money in the first place for this to work.
  3. Using technology. This is, for example what a YouTuber does – it wouldn’t make sense for most people to do live shows for 100 people and earn $1 for an ad they show at the beginning (I’m making up numbers, but you get the gist). But if you can make one video that can reach millions of people across the globe over all of time through tech, this makes everything suddenly worth it, and this becomes a source of passive income (after some initial work).

Passive Income sources

And finally, this is what this blog is dedicated to! The main forms of passive income sources that are accessible to most relate to point number 2 in the previous section. These relate mostly to investments and cash back methods, which are all over this website.

Happy Income’ing!

TheJKW