“Profits are better than wages. Wages will make you a living, profits make you a fortune. It’s difficult to get rich on wages, but anybody can get rich on profits.” – Jim Rohn, America’s Foremost Business Philosopher, Author and Speaker
Let me ask you this, “How much money do you get paid if you stop working today?”
If you are like most people, your answer is probably “nothing”.
But for those who have achieved financial freedom or financial abundance, their answers are very different. They have mastered the “secrets” to making money while they are not working, while they are on vacations, while they are spending time with their families and loved ones, and even while they are sleeping.
So… What Is The Difference?
The key difference lies in the way the money is made.
If you haven’t already read the book ’Cashflow Quadrant’ by Robert Kiyosaki, I would highly recommend you to read it.
This book has completely transformed the way I look at making money and has sparked my interest and determination to get started on my own journey of financial education and entrepreneurship back in Year 2011. And within 26 months of starting my journey, I have achieved financial freedom and escaped the Rat Race. You can read more about my story HERE.
Simply said, people who have achieved Financial Freedom and Financial Abundance have learned to build their Residual Passive Incomes, so that they can stop trading their time for money.
When you have enough Residual Passive Incomes each month to cover all of your monthly expenses, CONGRATULATIONS! – You will become financially free and you can stop trading your time for money.
Financial Freedom = Monthly Residual Passive Incomes >= Monthly Total Expenses
What Does ’Residual Passive Income’ Mean?
Now, let me explain what some of these terminology means…
’Passive incomes’ are incomes that come in with little or no action from you. Passive is the opposite from Active. In simple terms, when we talk about Active income, it means income we have to work for and exchange our time for. But when we use the term ’passive income’, it means the money we receive without us actively doing any or much work.
If you are working in a job today, chances are that if you stop working in your job, you will no longer receive a pay check. If you are self-employed such as a Financial Advisor, Real Estate Agent, Travel Agent, or you own a small business, such as a Doctor running your own clinic, an Accountant running your own practice, a Lawyer running a small law firm, chances are that if you don’t work, your income will stop as well. In order words, you are earning an Active income because your income requires you to continue to trade your time for money.
’Residual’ in our context means ongoing. You see, passive income can be non-residual. For example, if I lend $500 to my friend for a year and she pays me $50 one year later, I earn $50 of passive income. However, this income is not residual (ongoing) if my friend is not interested in borrowing money from me and paying me an interest again.
Therefore, in order to achieve financial freedom, we need ’Residual’ + ’Passive’ incomes!
Art Jonak, an Entrepreneur once said, ‘If you understood residual income, you would walk through a brick wall to get it.’ And I agree with that wholeheartedly.
Often times, to establish a sustainable residual passive income stream, we will have to put in time and effort initially – putting the right Team and System in place. Once we took the time and effort to set things up properly, the incomes can potentially become residual and passive with little or no actions from our part down the road.
The beauty is that you don’t need to first accumulate millions of dollars before you can become financially free!
Allow yourself 3 – 5 years to learn the mindset and skillsets needed to build your Residual Passive Incomes through building or acquiring businesses and/or establishing your investments. Learn from people who have already achieved what you want in life (your mentors!) and take MASSIVE actions along the way.
Get excited, pay attention and never quit! Your effort will be worth it!
‘Wealth is not about having a lot of money. It is about having a lot of options.’ – Chris Rock, American Actor and Producer
Change Your Mindset, Change Your Life
You may be wondering… why did I say you need to ’learn the mindset’ needed to become financial free?
If you are like most people, we have been conditioned to follow the ’traditional path of success’ – ’Study hard, get good grades, get a good job, work hard, save money and invest in a diversified portfolio of mutual funds until retirement…’
Have you heard of the same thing before?
For most people, by the time they finish school and start working in a job, they have already been ’conditioned’ by our education system, parents and peer groups for more than 20 years, thinking that the ’traditional path of success’ is the ’normal’ way AND the only way of living life.
What they didn’t tell you is that if you follow this path, you will most likely end up like most people, trading time for money until you are 65 years old (or older).
‘Most people aren’t living an extraordinary lifestyle because their financial vehicle doesn’t allow them. Their vehicle only gives them 14 day-annual leave a year, and a salary just enough to pay their bills. So, how to live extraordinarily? To change your lifestyle, first change your financial vehicle.’ – Unknown
But since the path of building Residual Passive Incomes is ’unconventional’ – at least it is not taught in our traditional school system – don’t be surprised if not everyone around you is supportive and understanding of what you want to do!
Don’t be discouraged. Stay your course, keep learning and keep taking actions!
Building Your ’Residual Passive Incomes’
So how do you build your Residual Passive Incomes? In fact, with the rise of technology and social media, you will find that if you keep an open-mind, opportunities are endless!
Here are just a few examples of Businesses and Investments that can potentially generate residual passive incomes:
- Interests from your bank savings (Side note – With bank interest rate near zero or at negative and many countries are printing money like crazy, putting money in the bank today is NOT the smartest investment)
- Franchise business such as McDonald’s and Subway
- Direct selling or Network Marketing business that has a solid Team and System
- Online business that is on autopilot
- Candy machines and snack machines at shopping malls
- Royalty from books or music you have created
- eBooks, audio and online programs you created from knowledge you already have
- Royalty from your patented inventions
- Positive cash-flow from your real estate investment properties
- A stock that gives you dividends
Once you open your mind, you will start to see that opportunities are endless.
Select the vehicles you are passionate about and can give you the lifestyle you want. Then learn as much about your selected vehicles as you can and take massive actions. Stay focused and give it time – select just one or two of these vehicles until you completely MASTER it.
Attend seminars/trainings because the best information to make you rich is often not found in the formal institutions but rather from those who have already accomplished what you desire. And, it is worth paying for.
The more you educate yourself financially and master the business and/or investing skills you need, the faster you can become financially free.
I hope this post has added value to you. If you have enjoyed it, please ‘like’ it or ‘share’ it so more people can benefit. Thank you!
With lots of love,