18 Benefits of Passive Income

Why is Passive Income Important? An individual with enough passive income to sustain themselves and their family, while exceeding their costs allows financial freedom. The following article provides

Making enough passive income to sustain yourself and set money aside is like getting your life back. If, like most people, you are making active income, then you are selling your time for money. That means that you are currently selling your time [or your life] for financial gain.

Why is Passive Income Important? An individual with enough passive income to sustain themselves and their family, while exceeding their costs allows financial freedom. The following article provides 18 advantages of having enough passive income to sustain yourself, your family, and set money aside.

If you do not yet know how much passive income you would need to live comfortably, please read this article on our site called “Can passive income make me rich?” (will open in a new window).

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1. No More Income Limits

When you are making an hourly salary, you are limited to whatever salary you are allotted per year. Sure, you could negotiate an increase in your salary with your boss. But, you can only work so many hours. If you are sick or take a few days off. These days most likely will not be paid.

Whereas, if you are making passive income, you do not have to be physically present to get paid. You can make money at any time of day and night. And since you do not have to be physically present, there are no more limits on the income you can make.

How much money you make will depend on your motivation, dedication, execution, mindset and personal investment in building your dream. How much you make will also depend on how passive, expensive, difficult, time consuming, risky, seasonal and scalable the passive income source you are building is.

2. More Free Time for Hobbies and Family

When you work a 9-5 job, you have to be physically present at work. You need to put in a certain number of hours per week. However, passive income allows you to be separate yourself from your income source. You are no longer bound to attending a job a certain number of hours to receive money. That allows much more time for a balanced lifestyle where you can spend time with your family or on leisure.

3. Ability to be Location Independent

Once they are rolling, most passive income streams do not require you to be physically present in a specific place to maintain them. Most passive income sources can be managed remotely or online.

A new wave of digital nomads and remote workers has taken off over the last decade. According to IWG, 70% of people globally work remotely at least once a week. There are hundreds of passive income sources that allow you to work or live anywhere. If you are looking for inspiration, check out this list of jobs you can do from home, or anywhere else in the world.

4. Better Tax Breaks [Depends on Your Country’s Laws]

This may depend on your country or specific location and the company you work for, but taxes are generally higher for employees than for sole proprietors. The reasons being that for sole proprietors, profits are taxed is based on your personal income tax rate, and not on a corporate tax rate.

Also, as a sole proprietor, you can write some of your business expenses off in your personal taxes. Have a talk with an accountant in your area to better understand the difference between the taxes you pay as an employee vs the taxes you would pay as a sole proprietor.

5. A New Form of Financial Stability

Most people have 9-5 jobs because they want stability and security in the form of a bi-weekly paycheck. But you could always lose your job because of changes in the company or layoffs. Passive income, if setup correctly, can provide stability in a new way.

6. No More Commuting to Work

If you commute to your 9-5 job, and spend time and gas to get to work, you are investing money back into your job. You are also responsible towards the company. Whereas, with sustainable passive income sources, you can work from home. This may even eliminate the need for a car.

7. Less Anxiety or Work-Related Stress

Knowing that you are making enough income to cover your expenses and more, without having to produce it by spending time at a job reduces stress, anxiety and fear for the future. However, actually creating your first passive income sources may be stressful.

Creating a passive income source will take time, sometimes months or years to create. But, once you have your streams rolling and you are producing more than enough income to sustain yourself and you family, that anxiety will greatly reduce, if not disappear.

8. Multiple Streams of Income

If you have a 9-5 job, you have one job. You could have another job on the side that you do for someone else. You may even have multiple part-time jobs. But all of them depend on you showing up and doing a good job to get your paycheck. However, if you have multiple streams of revenue in various domains (ex. Investments and online passive income sources such as niche sites and eBooks) then you can make income from a variety of sources without having to physically be present to make the income.

Having multiple streams of passive that are diversified is an excellent way to protect yourself in case one stream fails you at any point. Learn more about different passive income sources and ideas on this page our site.

See Our Passive Income Ideas List

9. Vacations & Breaks at Your Leisure

Unlike most developed countries, the US does not have regulations on the minimum number of days off for employees. 54% of American do not even use the time off that they earn according to Project Time Off  However, not taking vacations or time off can have harsh effects on your health with regards to stress, anxiety, obesity and heart disease.

Unless you have a flexible schedule and an understanding boss, you can’t take time off or go on vacation whenever you want when you are working for a company. However, on passive income you can travel anywhere and work remotely. If you are sick one day you can still make income.

10. No Getting Fired or Laid Off

Although most people work 9-5 jobs because of “job security”, they could still get fired or laid off. Whereas, if your main income is produced by your own passive income sources, you can’t lose your job. Of course, there are other risks associated with passive income sources. We provide more information on these factors in each passive income idea on this website. However, you have the power and control to quit or continue each venture you create.

11. Work on Your Passions and Hobbies

70% of American workers are not engaged at work (Gallup). People are bored, or don’t like their work. By contrast, having your own passive income sources allows you to live from things you are passionate and enthusiastic about. If you love coding, graphic design, teaching or are interested in investing, there is a passive income source you can build.

For example, Ricky and Jim from Income School create niche sites on topics and hobbies they are passionate about or want to learn more about. They have made sites on snakes, campers, pontoon boats and photography. Still looking for passive income ideas? Sign up to our newsletter for 100+ passive income ideas.

12. Create Your Own Retirement Plan

Most people feel trapped in their jobs because of “advantages” like health benefits and future pensions. Your parents may have had a “comfortable” pension, but it’s a known fact that pensions are disappearing, and are an unsustainable system you cannot rely on. And if you work for a company or the State, you may be obliged to retire at a certain age to get all the “benefits” you are hoping for.

Even if you are setting money aside right now, you need to take inflation rates into consideration as well as the average rate at which salaries increase. For most countries and regions, the inflation rate is higher than the rate at which salaries are increased (Willis Towers Waterson).

If your passive income sources provide you an income that is higher than your monthly expenses, you can save it for retirement, or re-invest it in another sustainable passive income source that will still provide you income long after you retire.

13. No More Company Politics

When you work for a company, you have to dress a certain way, act a certain way, and comply to company culture. If they did a good job during the hiring process, then you should fit with the company culture. But it’s not always the case. When you have your own sustainable passive income sources and finally quit the 9-5, you no longer have to deal with company politics.

14. Set and Achieve Your Own Goals

Nothing feels better than setting and achieving your own goals. When you are building passive income streams, you may have to work for yourself, set your own goals, constantly learn and work hard. It requires a lot of discipline and motivation, but the rewards are more than just financial. If you need help with staying on track, working with a coach or a passive income buddy (a friend who is also building passive income streams) could be a great way to stay focused.

15. Provide Value to More People

If your passive income sources are educational or entertaining things like books, videos, or music for example, then you are sharing your value with more people than just those immediately working with a company. The internet has made it very easy to be able to have a large audience of people all over the world to share your knowledge with. It’s a wonderful opportunity that can come with building passive income streams.

16. Pursue your Dreams

Passive income allows you to pursue your dreams rather than paying the bills. If you talk to your friends and family about their best memories in life, they probably won’t name an anecdote from work. They will probably tell you about a life-changing trip they took, or a special moment they shared with a family member. That’s what’s important in life. Not sitting behind a desk waiting for life to pass you by.

17. Personal Growth

When you work for a company, the chances are you don’t have time to focus on personal growth. When you are building new passive income streams, you constantly have to update skills your skills and learn new things. For example, if you are creating passive income streams related to the peer-to-peer economy, you will have to learn about new platforms. Building passive income streams entails a lot of learning – one of the best things life has to offer.

18. Passive Income is Freedom

Passive income is freedom. Freedom from having to work for someone else, from having to commute to a job, from stress, and from being location-dependant. Passive income is freedom to choose, to set and achieve your own goals, to constantly learn, to do what you love, and pursue your dreams.

Related Questions

Here are a couple other questions related to why passive income is important.

Where Can I Learn More About Passive Income as a Beginner? Beginners Passive Income is a website that teaches beginners everything about passive income from what passive income is to how to build passive income streams. The site covers passive income ideas and provides guides to create them for beginners. Learn more here.

Why is passive income important? Passive income is important because it allows you to be free from having to work for someone else, from having to commute to a job, from stress, and from being location-dependant. Passive income is freedom to choose, to set and achieve your own goals, to constantly learn, to do what you love, and pursue your dreams.

Beginners Passive Income

It takes time, effort, perseverance, motivation and skill to build profitable, sustainable passive income streams. We hope to inspire you and provide you excellent passive income ideas along your journey to financial independence.

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