It wasn’t so long ago that managing my personal finances was just another boring fact-of-life that had to be done. Once I discovered the benefits of passive income though, finding and creating passive income streams became one of my primary passions in life.

The more I acquire and build passive income money machines, the more convinced I become that creating them is something that everyone needs to be doing. I believe that passive income can truly transform people’s lives. In this post, I hope to share why I feel so strongly about that and return the favor for what my mentors have taught me.

What’s below are my top 5 reasons why I believe it is critical to develop multiple sources of passive income for yourself:

5. You get paid over-and-over again

With regular income, such as that coming from an employer, you get paid once for your efforts. Passive income on the other hand allows you to get paid multiple times (sometimes indefinitely), even though you did the work just once.

4. Unlimited income potential

I feel very fortunate to have had the opportunity to learn from some multi-millionaires. In my conversations and mentoring sessions with them, one common personality trait really stands out — they are all are masters at using leverage: leverage of money, leverage of systems, and lastly but most importantly, leverage of time (both of their personal time and that of other people).

When it comes to earning money, there’s only so much of you to go around. None of the millionaires I’ve met has made their fortune by working 3 jobs plus the night shift at Denny’s. They’ve taught me that when you’re trading time for money, there’s only so much time in a day… so there’s naturally a ceiling on how much money you can possibly make.

As your income from passive sources increases however, so will your amount of free time. The extra time that’s freed up can then be refocused on creating additional passive income streams. In this way, you’re spending your time on growing your income instead of just maintaining it.

3. True financial security

I’m sure you’ve heard the phrase, “don’t put all your eggs in one basket”. This metaphor is especially relevant when it comes to your income. When all your income is tied to a job, then not only are you putting everything in one basket, you only have one egg! If you get laid off, your income instantly plummets to zero. You’ve lost your only egg.

Many people believe that having a steady job is financial security. I beg to differ for the reason just stated. You wouldn’t gamble your entire retirement savings by putting it all in just one stock, so why would you want to trust your income to only one source? Losing money in the stock market is one thing, losing your only source of income is even worse– as the impacts are felt immediately in your ability to keep a roof over your head.

You are much safer when your income is built upon multiple sources of passive income. Under this scenario, when you lose a source of income, it’s not the end of the world. The other passive income streams are still there and flowing to support you.

2. Financial freedom

A popular definition of financial freedom is just having a lot of money to buy whatever you want. There’s nothing wrong with making a lot of money, but many people do so at a high personal cost. They may be working 60+ hour weeks at a high-stress job, forsaking family and friends, and rarely having any time left to do something truly meaningful with their lives. These people may have money, but how free are they? They may get good grades on the “financial” part of the picture, but in my book, miss the mark on the “freedom” part.

Financial freedom to me is when you’re in a position where the total amount of your passive income exceeds your expenses — whatever the dollar amounts are. When your finances reach this state, then you are truly free — since you no longer have to work to pay the bills. Your time becomes truly freed up to direct as you choose.

1. Fulfill your life’s purpose

Yes, I am being serious about this one. It’s not some corny attempt at humor. I believe each of us has a reason for why we are here on this earth. Each of us has a gift to give back to the world. To me, people’s gifts are to be found in their passions — those things that they enjoy doing just for the fun of it… just for the sheer joy of it.

What gets you excited? What makes your heart sing just thinking about it? Make a list and really dig deep. I believe the things on your list are what your soul is yearning to express through you. Your passions are what you are good at… what you are talented at. These also happen to be the same gifts you can provide the most benefit to others by sharing with the world.

Think about it… why would you be given such talents, interests and blessings if you weren’t supposed to do something with them? Your talents have been given to you on purpose… for a reason. Please put yourself in a financial position where you are free to share the most of your unique gifts with others; not just for your sake, but for every else’s benefit as well.

If you are currently in a job that is not aligned with your purpose, begin working on supporting yourself through multiple passive income streams instead. Once you have reached the financial freedom state, you will be free to live from your purpose full time.

If you do love your job now, that’s absolutely awesome. I would still advise working on creating your passive income streams to safeguard against any sudden changes to your employment situation.

Regardless of how you feel about your current job, having additional streams of income can only be a good thing, as they will put you in a better position to enjoy life more fully and allow you to make a larger contribution to the world.

Where to Go from Here?

This is the inaugural post in a long-running series dedicated to passive income and financial freedom. In future posts, I will be outlining several ways passive income can be earned and drill into more details on each method. For those methods I am not personally an expert in, I will be naming names for who is, and in some cases, have those experts guest post on my blog directly.

Passive income is a proven path to financial freedom that’s been well-traveled by many, many others before. If you’d like to join me on that path, I’d love to have you along for the journey. The best way to follow this series is either by subscribing to e-mail updates about this blog and/or my RSS feed.

Take care, and we’ll talk again soon.

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