“Buy this system today and start earning passive income in your sleep.”
I see this on Instagram all of the time. Well, I mainly see funny memes, random motivational quotes, and fun stuff from friends. Once in a while I’ll read about some new passive income system. The person usually posts a photo of an unrealistic view (gorgeous girls that they’re not with or a mansion they don’t live in).
I try to have fun on social media. Most of us just want to kill some time at work. You’re likely either fed up with reading about passive income or your curious about how you can make thousands of dollars while you sit on the beach (as the advertisements often promise).
“I want to earn passive income. That sounds like too much work.”
A friend told me that recently. I couldn’t believe it. This guy wanted to chase this passive income myth so badly that he wasn’t willing to increase his income in general. I helped him start a blog and even spent hours trying to figure out a way he could freelance for extra dollars. He had the nerve to tell me that he wasn’t interested. He was looking for something more passive. He then spent $500 on some process that promised him the world. He’s yet to see a dollar from that investment he made many months ago.
I don’t want you to be that person.
I had to write an article about passive income. I’ll share with you what you won’t read in motivational quotes on Instagram.
Are all passive income systems a scam?
“All events of wealth are precluded by process, a backstory of trial, risk, hard work, and sacrifice. If you try to skip process, you’ll never experience events.” — M.J DeMarco
No. Not at all. I’m all about investing in yourself and paying for knowledge. I just don’t believe in spending money foolishly on some shortcut that doesn’t exist. I don’t want to see you get dragged into some complex pyramid scheme that you can’t get out of. I don’t want you calling your friends and family to sell them faster Internet services because your new scheme involves you selling to your inner circle.
The first thing that you need to do is you have to look at the person and the source of income. Who’s this person selling you the process? Do you trust them? Do you know them? What’s the source of income? Will you be selling something? Who will you be selling to?
What else should help you figure out if the passive income system is a scam or not?
- Everything’s supposed to be easy.
- You don’t know what you’re going to do for money.
- There’s no proof that anyone has actually done this before.
- Everything you read appears to be vague.
- You have to sell to your inner circle.
- You have to bother your family and friends (never do this!).
- You have to sell random things.
- You’re guaranteed up to $10,000 in your first month. How many people do you know that make this much money?
I totally get it. You’re frustrated with your job and want to make more money. Spending a few hundred bucks on a program that doesn’t work will only make things worse for you.
Here’s what you need to know about passive income…
You need to know what’s going on behind the scenes. I’ve seen people post about passive income that don’t even earn passive income. I’m not sure if they even earn a regular income. I don’t want to see you get confused and upset because you’re not earning money while you drink tequila all day like the guy with the fake view on Instagram.
You need to know how you’re going to make money.
This is the first point. There has to be a way for you to make money. You have to know exactly how the money will get into your bank account.
How will you make money? How will the money come into your bank account?
If you can’t answer this then please re-evaluate everything.
You need to make REAL money first.
Do you have any money coming in? Have you tried to increase your active income?
Here’s how you can make real money first:
- Switch jobs.
- Get a raise at work.
- Hustle for that performance bonus.
- Freelance for extra money.
- Get a part-time. Yeah, this one’s not easy.
- Drive for Uber.
Long story short: you have to work for your money before you can start thinking about free money. You can’t skip the whole making money phase and jump right into passive income.
Passive income takes time or money.
You need to have either time or money to earn passive income. Ideally, you should have both.
For example, when my friends come to my condo they sometimes mention how lucky I am. Truth be told, luck had nothing to do with it. I hustled to save up for the unit. I was able to sell my previous unit and use the profit to make this investment. I upgraded from a one bedroom to a two bedroom with a parking space. You have to work your way up. You need to time and/or money.
There’s no magic bullet.
I hate being the guy that has to say this. I’m not one of those people that’s only going to tell you to work hard. I provide real solutions. I just have to point out that some random stranger on Instagram isn’t going to solve all of your problems by giving you the life that you dream of because you sent them $197.
You can’t go from zero to hero just because you liked a post on Instagram.
How do I earn passive income?
Full disclosure: I actually do earn some passive income. I’ll never try to sell you my passive income blueprint because it would take forever to implement and you would just get annoyed with me.
- Real estate. I’ve dabbled into real estate with a few ventures (Air BnB, rental property, and selling a unit). The income from real estate can certainly be passive when things work out (monthly rent covers expenses or you sell for a profit). You need to be ready to lose some money in the process though. You really need to know what you’re getting into with a rental property.
- Blogging. Blogging can eventually earn you passive income in theory. You definitely have to put the work in to build your audience and to get the right content out there. Hopefully at some point a few of your articles will rank high enough for you to make some money without putting in any additional effort. These articles could generate you money through affiliate income (that’s what works for me), book sales, or any other product that you get paid to promote.
I used to be into stocks but I got out of it. I’ve also launched products (books), but I would never consider that income to be passive. If you invest in marketing (Facebook ads) you can create a funnel that allows you to generate passive income online with a book or a course. That’s some pretty advanced stuff and will definitely require more than one weekend of work.
How can you start making passive income?
Start freelancing for extra dollars.
The first step to getting into passive income is to increase your income streams. I firmly believe that everyone should have multiple sources of income. I want you to use your skills to make more money. You have to be able to do this before you can think about free money. Work on landing your first client and build from there.
Cut back on your expenses and save up.
Put your money away so that you can invest it when the time’s right. The only way to do this is to cut back your expenses, start saving, and keep on going until you have enough money to invest. You also can’t skip this process.
Use your money to make you money.
Passive income rarely comes easily. You have to invest your money into something that will pay off. This could be a rental property or a business.
Find something that you want to invest in and research this until you feel like an expert. To feel like an expert you have to be able to explain this investment to one of your drunk friends.
Set one financial goal.
What’s your financial goal for the next 6 months or one year? What’s one financial goal that you want? Go after that goal instead of blindly chasing passive income. Make your one goal a reality and build on that momentum.
My biggest goal in my early-20s was to save up enough money to purchase a pre-construction condo. To do this I had to get into the habit of saving money and I forced myself to constantly focus on finding new ways to make more money.
Passive income is great. Get a real income first. Farhan started selling shirts. Matt started making tables. You can start your own online business. It’s easier than ever to start making money if you’re willing to commit to one hustle. You can’t jump from idea to idea hoping for the best.
What will you do?
“Instead of digging for gold, sell shovels. Instead of taking a class, offer a class. Instead of borrowing money, lend it. Instead of taking a job, hire for jobs. Instead of taking a mortgage, hold a mortgage. Break free from consumption, switch sides, and reorient to the world as producer.” — M.J DeMarco