More and more often you can find video courses, blog articles or e-books with which you can generate passive income to become financially independent. “Financial independence” – The dream of every freelancer ;-). Unfortunately, it is not as easy to achieve financial independence solely with passive income as many online courses propagate. Many myths are spread that have nothing to do with the practice. In this article I would like to look at the hard facts together with you without rose-colored glasses.
As you may have read in my previous articles, I don’t earn my money just by providing direct services to customers. I also sell graphics / icons on online marketplaces to generate a passive income step by step. Meanwhile I have been doing this for almost two years and am represented with over 25.000 icons on the online marketplaces (iconfinder.com, thenounproject.com etc.). In short: I could already gain a lot of experience on the topic of “passive income”.
Before I mention the three most common myths, I would like to explain briefly what the term “passive income” means to me:
In a classic employment relationship / customer order you usually swap working time for money. You receive an income that is proportional to the time you spend. The longer you work the higher your income. With passive income it is different. You receive money even if there is no “direct” amount of work to be done. The word “direct” is in quotation marks, because of course you have to invest some work in the beginning to develop a product that can generate a passive income. So much for the explanation.
Because the idea is so nice to make money overnight, there are some more or less reputable providers that help you to generate a passive income. There are also many false statements that I cannot necessarily confirm from my practical experience.
Myth 1: I get money without working for it
Because the income is not directly related to a workload, one can easily get the impression that one has to do almost nothing to earn money passively. To create a product that generates passive income in the first place, however, an immense amount of work is necessary. This effort is not matched by any income. At the same time, the prospect of success is anything but guaranteed. 70 percent of newly introduced products fail. So it is not right that you do not have to work for a passive income. The amount of work is merely decoupled from the income. If the product fails, the invested work effort is not even remunerated.
Myth 2: With passive income I will become a millionaire
The word “scalability” has mutated into a real buzzword in the start-up scene. Good scalability means that it makes little difference in terms of time and money whether I offer a product or service once, twice or a hundred times. Digital information products such as e-books, online courses or icons are therefore particularly scalable, as no logistics or material costs are involved in selling them. So what else stands in the way of wealth? It is the visibility or reach. In order to sell digital information products well, you have to make many people in your relevant target group aware of your product range. That costs a lot of energy, time and money. So if you have generated 10.000 EUR of passive income per month, but this is offset by 9.500 EUR of advertising expenses, wealth is still a long way off :-).
Myth 3: Everyone can generate a passive income
Basically, of course, it’s true. However, in order to generate relevant income from passive sources, the right mindset is of crucial importance. A smart idea alone is rarely enough. In addition to the good idea, the following characteristics are especially important to generate sufficient passive income.
- Determination: Setting goals and implementing them with discipline
- Focus: Full concentration on one goal
- Implementing power: Putting considerations into practice. Without action the vision remains an illusion!
- Frustration tolerance: continue to work towards the defined goal despite setbacks
- Passion: If you are not passionate about the cause you are working on, it will be very difficult to maintain the discipline necessary to achieve your goal.
Certainly there are many helpful courses, books or even seminars on the subject of “passive income”. Before you take advantage of such an offer, I recommend to check and prepare your own mindset accordingly. First find out what you really like to do. Maybe my contribution with the wheel of life will help you. Only when you have found out your passion and strengths, can you summon the discipline to realize your vision and overcome setbacks. I hope this contribution helps you on your way to financial independence. I wish you success in increasing your passive income.