Photo by Alexander Schimmeck on Unsplash
Introduction
We live in a world of unprecedented opportunity. Learning a skill and finding a career you enjoy is now easier than ever before.
With the inception of the internet, it is now possible to make money outside of work hours, potentially even while you sleep — what some people may call ‘passive income’.
One definition of passive income is ‘income that is acquired automatically or with minimal labour to earn or maintain’, and is a topic that has increased in popularity considerably over the past decade.
A simple YouTube search of passive income will return thousands upon thousands of videos claiming to help you make passive income ‘easily’.
These videos often come with a thumbnail stating something like ‘my six sources of income’, but there is one thing that the majority of these videos neglect to mention:
That selling the passive income dream is the business.
That their ‘passive’ income stream relies on thousands of people believing they can make money with minimal or no effort.
Returning to the above definition, people selling the passive income dream focus considerably more on the ‘income that is acquired automatically’ part rather than the ‘labour’ part.
This is because the idea of making money without any effort is attractive — to the vast majority of people on the planet.
But it is also not realistic.
Aside from winning a lottery or gambling, there are very, very few opportunities that provide income without some level of risk, effort or time investment.
This is the passive income trap, and below are its two main components.
Mistake #1: Believing Entirely Passive Income is Possible
There is absolutely no such thing as truly passive income — unless you were born into wealth or stumbled upon a lot of money and receive payments from this.
If neither of the above applies to you, you must work for your money. However, the good news is that you can make money somewhat passively — but you must first consider problematic passive income beliefs:
The belief that completely hands-off income can be achieved with no ongoing management
The idea that passive income can be achieved without any upfront effort
Ironically, even those who sell the passive income dream have put in the work upfront — building a YouTube channel or audience that allows them to sell the dream.
As such, these people are not making money passively, as they have, and continue to, put time in to grow and maintain their audience.
Consider a random YouTuber; let’s call them Mr Smith. Mr Smith uploads weekly videos about various topics, from personal finance to self-improvement and maybe even a vlog or two.
Over time Mr Smith’s channel grows, his subscribers accumulate, and he begins making money from Google AdSense. Suddenly he’s making money while he sleeps.
‘Fantastic!’ he thinks; maybe I should make a video about passive income; 'I am making money while I sleep, after all'.
A few days later, he uploads his video and receives 10x the views of his previous video (because who isn’t interested in making money without effort, right?), so he doubles down.
Over the next few weeks he spams his YouTube channel with ‘passive’ income videos, all the while neglecting to mention the effort he has, and continues to, put in to build his channel.
As such, the internet is littered with passive income content because…
Selling the ‘you can make money while you sleep’ dream is considerably easier and more popular (and profitable) than the ‘it will be difficult and you will likely fail’ reality.
The problem is not that making (somewhat) passive income unattainable. The problem is the assumption that you can do so without any effort.
Many teachers, musicians and authors make money while they sleep, but they had to create the course, music and books first.
Once you accept that income generation will require effort, it’s time to avoid the second mistake — not committing.
Mistake #2: Avoiding Commitment
If you are prepared to put the effort in upfront to reap the rewards later, you’ve taken the first step towards making money that isn’t directly tied to your time.
However, there is still one roadblock in your way — thanks to the abundant opportunity available in the age of information.
While it may seem good to have so many opportunities, in reality, this usually leads us to switch tasks whenever it gets complicated.
Ask yourself the question — ‘how often do I prioritise the easier tasks over the more difficult ones?’ or ‘how often do I clean the house rather than tackle the most important work?’.
If you’re anything like me, the answer is pretty often.
This is because the former feels productive, so you no longer feel guilty about procrastinating — after all, you’re being productive… right?
But the same applies to starting a new side hustle or business.
If you’re overwhelmed with opportunities and all feel equally important, you will change tasks as soon as progress slows.
This will severely inhibit your progress.
Moreover, as we are surrounded by constant entertainment, from social media to Netflix and YouTube, the pull of distraction has never been greater.
Overwhelming opportunities + relentless distractions = extreme difficulty committing to one endeavour.
In the words of Gary Keller, author of The One Thing — “extraordinary success is sequential, not simultaneous”, but if we constantly move from one thing to the next, we interrupt the sequence.
Do You Really Want This?
Before jumping on board the passive income bandwagon, one thing to consider is this: if you could make money without working, would you even want to?
On the surface, this sounds fantastic; you could sit in the sun all day sipping margaritas.
But how long before you would become accustomed to this way of living?
How long before you would get bored?
As you jump on the hedonic treadmill, you adapt to your new way of living, and this becomes your new happiness baseline. This is the first problem with actually achieving ‘passive’ income.
Second is that earning money without working for it eliminates the fulfilment you get from making progress and growing as a person.
The process of building a successful side hustle or business is what brings happiness, not simply the end result.
Overcoming setbacks, learning as you go and sharing your achievements with loved ones brings as much, if not more, joy than simply skipping the line.
Summary
The passive income dream is incredibly appealing but also deeply flawed. Therefore if you decide that you want to make money not tied to your time, be realistic and consider the following:
Making ‘passive’ income will take a lot of work upfront
It is not possible to make money without effort
Making ‘passive’ income will require a commitment to one thing at a time
Skipping the line may not actually be what you want, and if you get the opportunity, you may lose a lot of the fulfilment and happiness that comes with engaging with the process
Thank You
If you made it this far thank you — I appreciate you taking the time to read my work and sincerely hope you enjoyed it. If you would like to continue reading, I’ve included a few of my most popular articles below.
Thanks again,
Rob