18 Benefits of Passive Income
& Why it Makes You Richer
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).
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
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
6. No More Commuting to Work
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.
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
14. Set and Achieve Your Own Goals
15. Provide Value to More People
16. Pursue your Dreams
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
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.