If any of you are fans of the Robert Kiyosaki series Rich Dad Poor Dad, or one of many other trainers out there who teach about earning income, you’ve probably heard the terms active income and passive income.
Active income is the revenue you earn by physically doing something. Your income depends on you being there.
- You show up for your job and you get paid by the hour.
- You bring in a client and charge them for a photo shoot.
- You shoot a wedding and have people order images from you.
Passive income is the revenue that comes from something you have in place that earns revenue whether you are there or not.
- You own a rental house and the renters pay you month after month.
- You have investments, stocks, dividends, or retirement funds paying you every month.
- You write a book and receive royalty checks year after year.
- You own a stock image that makes money month after month.
Chances are up until now you’ve received the majority of your revenue from active sources. Most people do.
But think for a moment how much easier life would be if you could have both working for you all the time.
You are a wedding photographer. You photograph 35 weddings per year. You spend over 40 hours catering to each individual client’s needs (including initial consultations, marketing, booking, shooting the event, production, and delivery).