(This is one of the steps in our Money Kickstart Challenge. If you want to get a copy for yourself simply click here and enter your email. We’ll send it off to you right away)
Today is a big day. Today we are going to learn how to win the money game and the one simple formula that will make all the difference in you getting set up to win the money game.
We have already set up to keep track on how we are doing with money.
We have built the start of our budget.
But how do we win the money game?
Back in Step 1, you wrote out how you would know whether or not you were successful with money.
And that’s great.
But how do you know when you have won the money game?
Nobody comes to your door and says, “Congrats! You passed Go. Here’s $200.”
It’s a little—ok, a lot—less obvious than that.
For us, we need to define winning the money game.
Here is the formula to winning the money game:
Annual Passive Income > Annual Spending
Let’s get clear about what I mean.
First, what is passive income?
Passive income is income that shows up regardless of how much time you put in.
Think of it like interest on your bank account.
You put the money somewhere (in a savings account, in this example), and you get paid for having it there.
Savings accounts are usually everyone’s first experience with passive income.
But passive income can mean many things. It’s essentially income that comes from sources other than a job or business that you don’t have to actively work for.
The Passive Income Test
If you can walk away for a year and still be getting that same (or more) income, then you have passive income.
If you have to be there, it’s not passive income.
If you have to do things to make money, it’s not passive income.
That’s the reality of it.
Here are some more common passive income ideas (besides interest):
- Dividends from shares of companies.
- Rental income from real estate.
- Multi Level Marketing earnings that come from your downline.
- Vending machines.
- Royalties from a song or book that you have released.
- Advertising from your website.
- Product sales from your website..
My favorite is the passive income from blogging, but that’s not always 100% passive because I’m always working at building my blog.
That’s the thing. To get any of these types of income, you have to put in effort first.
You will either have to write the song, research the stock, create the blog, or find the rental property.
It’s what happens afterwards that’s important.
Do I have to have just one source of passive income?
You can, and in my opinion, should, have multiple sources of income.
This is how you can weather any financial storm that hits. By having enough money coming in from a variety of different sources, you protect yourself from one of them going dry.
Personally, we have several sources of passive income. It’s nice to have a few since you don’t become reliant on one to feed you should things ever slow down.
But like everyone else, we started out with nothing.
Bit by bit, we added to our passive income streams.
That’s how this goes. You start with a small amount, and you watch it grow by adding to it over time.
Pick one to learn about and start building your income.
Once you get a taste for passive income, there isn’t anything else like it. You will want more. It’s normal, and celebrate the milestones on your way.
Here are some books to help you get started with your passive income journey.