Why Passive Income is Hardly 'Passive'

24 Mar 2023


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.

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.

Just remember:

  • 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.

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Most of the people plan to make passive income but main thing is we should put lot of hard work and dedication
Johnson Chau
One thing I found about passive income is that it only exists because you have earned active income before. Take real estate for example, without working to buy your first property, renting it out as an investment property wouldn't be possible.
I've been looking for jobs that can give me a passive income. But it is harder especially for the results I get from searching on Google. So my question now goes 'is passive income actually a thing'?
@Eyesakov2123 - You're right! It takes time to develop any skill, whether it will help you earn 'passive' income or not. But you'll eventually get there if you're relentlessly pursuing that skill.
Laura S. Wegner
@Eyesakov2123 I absolutely love this! You are absolutely right in 2 main things: (1) Learning skills needed for a side hustle takes time and effort. Finding that time is difficult if someone is working a 9-5 at the same time. Promoters of side hustles often portray their success as instantaneous, which misleads a lot of people. (2) The survivorship bias is a true trap because prospective "side hustlers" see how fast (allegedly) someone else became successful. If it doesn't work out as fast for them, most people do not only give up, but they are also extremely discouraged to put effort into anything that they are not already good at...