Written by: Amanda Rose, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
I don't know about you, but in my high school, "Money Creation" wasn't a class that was offered. Instead, we learned algebra, trigonometry, and calculus, which of course, we use those every day… oh wait, we don't.
Unfortunately, our school system is still based on training our skills on how to get a job, but it doesn't teach us what to do with the monies earned from that job or how to create our own wealth. The days of landing a job and holding it until retirement are over. Whether an employee or entrepreneur, if you ever want to experience financial freedom, you must understand the 3 types of Income and how to utilize them effectively.
Let's dive in...
Working income is what we're all familiar with. Working income essentially means you are exchanging time for money; it requires you to be present to be earned.
Working income could come from:
Working as an Employee on Salary or Hourly Wage
Working on Commissions
As a Business Owner or Entrepreneur where you are running your business
As a Contractor Working Jobs
Working income should be considered "seed money". We all need money to live day-to-day, and working income gives us immediate access to live with food and shelter while we create other incomes that will eventually grant us freedom. It can also be used for investments that allow your money to grow.
On its own, working income won't bring financial freedom. Expenses always rise proportionately to income. This is true both in the case of cost-of-living and consumer buying habits.
By the time you get your next raise, the cost of necessities will have risen.
When you earn more (let's say, for example, getting hired at a new job for twice the salary your last job paid), typically we see the trend of buying a nicer home, better car, higher-end clothing, etc. Meaning as incomes rise, so do expenditures. A big reason for this is because no one is taught investment strategies to give that extra money a purpose!
Residual income allows you to leverage the time you're working. A few great residual income examples are Network Marketing with their monthly auto-shipment products, Monthly Subscription Boxes, and Memberships. You make the sale once, and for as long as the customer keeps their subscription, you get paid regularly (typically monthly or quarterly).
The most powerful element of residual income is its ability to grow your income without adding additional workload.
Sell 5x $100 subscriptions
Sell 5x new $100 subscriptions
5 residual sales
Sell 5x new $100 subscriptions
10 residual sales
Sell 5x $100 subscriptions
15 residual sales
Passive income… the Golden Unicorn of Income that most people have heard of but aren't really sure exists. Well, I'm here to tell you it does exist, it's as magical as it sounds, it will allow you true financial freedom, and there are many ways to create it! Passive income is a source of income that doesn't require you to be present for it to come in, AKA making money while you sleep or sit on the beach drinking margaritas!
Typically, passive income sources require us to put in our time upfront without any or much compensation while we're creating it, however after it's done and the systems are in place it needs little to no maintenance to continue to produce income for us.
Some Ways for You To Begin Creating Passive Income
There are many passive income vehicles, and ultimately, it's important that you find the right ones for you. Just as in business, the key is following your passion. What are you excellent at? Use that question to help you determine what you can create and turn into a passive income source.
WRITE A BOOK: A book tends to be a long time investment upfront to create. However, the payoff can be huge. With self-publishing making up ⅓ of the market, it’s never been easier to get your work out. As an entrepreneur, when you have a book out, it helps you establish your authority in your field. You will earn a royalty payment on every book sale for life!
CREATE A DIGITAL COURSE: Teaching others to do what you’re great at is one of the most tried-and-true ways to generate massive cash flow. The great thing about course creation is that you can make it once and then sell it forever! With incredible systems out there for you to create effective sales funnels to attract clients, this is one of the best passive income strategies that I can suggest you consider. I would highly recommend getting onto a platform that has easy integration of funnels, course hosting, checkout pages, e-mail marketing, and everything else you need to simplify a systemized onboarding process. I personally use Kajabi, and I love it. If you want to try Kajabi, you can get an extended 28-day free trial here!
DEVELOP AND AFFILIATE PROGRAM: Create an amazing product or service, and then create an affiliate program that allows people to sell your offers for you for a % of the sale.
BUILD A BUSINESS AND THEN HIRE A CEO TO RUN IT: Create a business that you can train someone else to run for you. Many of the best-known business moguls have multiple businesses, and they are able to because they bring on excellent people who can run it while they are elsewhere.
INVESTMENTS: Investing allows your money to grow into more money. There are many forms of investment you can look into. The key with passive income is that it’s hands-off, so consider something that pays dividends.
AUTOMATE: Chatbots, surveys, pipelines, etc. in this digital age, we have so many incredible tools available to us to take over the sales process. Once you have mastered the organic way of selling your product or service, then automate that system.
VIDEOS: I often have actors who come to me feeling stuck when they are between acting jobs. Being able to create great video footage can become a passive income stream all its own; there are many platforms now that will purchase stock footage for ad companies, film, companies, and so on. Do what you love and then sell it; to make it passive income sell it to a platform that will pay you a royalty for every sale VS–
AUDIOS: If you’re a musician, just like an actor, you can create content that is sold through a stock-audio platform. You could also produce your own album and sell it digitally through music programs. If you are a public speaker, consider publishing an audiobook; just like a regular book, you’ll get royalties on every audiobook sale for life.
SOCIAL MEDIA MONETIZATION: YouTube is a great example of monetizing social media through their advertisements. Whether social media fills up your sales funnel, or a platform integration allows you to make money off of engagement, look for ways to make social media another source of income.
REAL ESTATE: Investing in real estate is great on two fronts. First of all, purchasing properties and renting them out typically gives you an immediate source of extra income. Second, when you hold onto properties, granted you are not forced to sell at an inopportune time, typically in the sale of the property you’ll have a big payday.
Start asking yourself, “How can I take what I love and am passionate about and create a passive income source from it?”
The biggest takeaway I want you to have from today is that, with an understanding of income streams and putting your focus into developing passive income streams. You can work because you want to and not because you have to!
Cheers to your financial freedom!
*Some clickable media, usually the book recommendations, are affiliate links, and should you choose to buy through using those links, then The Infinite Power of You Inc. may earn an affiliate payout commission. This is at no additional expense to you.
Amanda Rose, Executive Contributor Brainz Magazine
Amanda Rose is the founder & director of The Infinite Power of You Inc., a multi-published multi-genre author, business, wealth, & mindset coach, actor, motivational speaker, and online course creator. She is a multi-passionate entrepreneur who has been in the online space since 2013, and a sales expert for over 10 years. It's her passion to help her clients build lives of freedom and joy, and thriving businesses with multiple revenue sources, through strategies combined with mindset mastery. Amanda's mission to shift human consciousness to create soulful abundance through mindset practices.