Why Passive Income is Hardly 'Passive'
Search up "how to make passive income", and you'll get something like this:
Indeed, the ideal of earning 'passive income' to 'get ahead' has become the holy grail of our times. We're told that creating our own YouTube channels, dropshipping sites, e-products and blogging site is a great way for us to start being 'smart' with how we earn our money.
Gone are the days where we have to work in a traditional 9-5 job; why not just start your own 'side hustle' which will generate 'passive income' to replace your traditional day-job income! Your income shouldn't be tied to the number of hours you work; that's 'old school thinking'. Rather, you should be generating income in the background without having to work all the time for it (or so the story goes).
And to some extent this is true - We want to be working 'smart' so that we maximise our earnings from our time. In saying this, something that often gets neglected is this: You also need to work f*cking hard.
Time to Tell the Truth
Let me start by saying this:
Like all things, developing a skill that will help you earn 'passive' income takes time and relentless work.
Let's look at a few examples of common 'passive' income streams and see how much work it actually requires for them to do well.
- Dropshipping: For you to succeed at dropshipping, you need to understand a whole host of skills, including product development, marketing and customer relationship management. You need to have a solid product that you can produce on a consistent basis, know how to market yourself using social media and SEO (if that's what you're opting for), and how to manage customers. These skills take years to develop. No wonder that an estimated 9 out of 10 dropshipping businesses fail in the first four months!
- Running your own business: I'm actually embarrassed to list this one here as 'passive income', but I've seen quite a few sites list 'buying a business' or 'starting your own business' as forms of passive income. Long story short, running your own business is H-A-R-D. The plethora of skills you need to learn is ridiculous - Marketing, human resources, customer relationship skills, emotional intelligence, how to adapt to macro economic conditions, product development, design...... I could go on, and on, and on. Suffice to say, running your own business is not a passive walk in the park or something that can tick along in the background without your attention. Surprise: Small business owners work twice as much as regular employees.
- Starting your own YouTube channel: Let's keep this one short and sweet - 97% of YouTube content creators fail. Why: Because the market is super saturated with everything vying to post content on YouTube and it takes an immense amount of work to get noticed in a sea of videos. Another fun fact: 5 billion videos are uploaded every day on YouTube. You need to work for it if you want to get noticed!
And finally, it would be remiss of me to not mention this one...
- Blogging: Let's talk from personal experience. As someone who has been blogging on BULB for a year now (at the time of writing), I can't tell you how much work has gone into developing my skills as a blogger. And no, I have not become wealthy overnight from it. My blogs take 1-2 hours to write on average. Multiply this by 162 blogs, and you get 324 hours worth of work. This is not including all the work I've done for blogging sites and projects outside of BULB. Believe me, I'd have more money in my pocket right now if I had just poured all the time into working a second job (not that I'd want to). Even more, I have not become 'famous' from it at all (not that I want 'fame'), and I'm still an absolute nobody on the internet (which is more than fine by me). What I'm saying is this: Don't expect to get rich and famous within a few days of starting a blog; blogging requires relentless work that is exhausting at times.
Here's a helpful video from someone who speaks my language:
So What is 'Passive Income' Really?
In my view, 'passive income' involves working relentlessly hard to develop a skill which might help you earn some income in the background. One day, things might pay off: You might be in the right place at the right time, or you may even start to earn advertising revenue in the background.
But surprise, surprise, passive income also requires work to maintain it.
Passive income requires work to maintain it.
What happens when you stop posting YouTube content? Your searchability declines and your competition can overtake you. What happens when you stop blogging? Your SEO gets hurt. What happens when you stop reading up on real estate market conditions or stop maintaining your property for your tenants? Nothing great.
In short, maintaining passive income itself is a day job. There is no such thing as money for nothing.
Why We Don't See Reality - Are We Just 'Blind'?
Well, sort of.
There is of course survivorship bias. We only see the 1% people who have succeeded generating '10 streams of passive income that help them earn $10,000 a week', but do not see 99% of people that have failed.
Moreover, don't forget that a nice way for internet influencers to make passive income is to sell a course about how to make passive income! 🤯🤯🤯
Now, I'm not saying don't try to earn income intelligently or don't develop different skills to help you earn alternative sources of income. What I am saying is that you need to work hard, and the notion that you will earn money from doing 'nothing' is an absolute myth.
- Maintaining passive income is a job in itself
- Like all things, earning 'passive income' requires 'hard work'. Let's stop wasting our time here and drop the word 'passive' from income
- Run away from anyone who tries to sell you a $5000 course on how to make passive income
And finally, my favourite:
A day job that pays you a salary of $70,000 may no longer seem that 'bad' after all.