Since the pandemic, many of us have been trying to devise creative ways to keep our businesses thriving and bank accounts flowing. But, did you know that it’s possible to make $8,000 a month with a passive income?

However, understanding the difference between passive vs active income is what people get confused at. For instance, how can someone work 10 hours a day and make less than someone working a couple of hours a day?

Thankfully, you’ve clicked on the right article to find the answers to these questions. This guide will walk you through the differences between these two types of income and how to benefit from their unique approaches. 

Let’s dive in!

Understanding Passive vs Active Income

How you make money will automatically fall into two categories: active or passive income. Even if you don’t realize it, you’re currently earning your finances via one of these methods. 

But, what is active income? 

Active Income 

If you’ve ever worked a 9-5 corporate job at a bank or an advertising agency, then you’ve earned an active income. That means the main feature of an active income has a salary. 

However, that’s not the only element of an active income. Some other examples of this method of making money are as follows: 

  • Commissions 
  • Tips
  • Consulting 
  • Freelance work

Most of us start with an active income as it’s traditionally the first approach to creating an income. Then, people tend to use savings for investments or pension funds.

Although it requires you to work a certain number of hours before getting paid, it’s an important stepping stone in a career for anyone. And, it can teach you a lot about work ethic.

Without a baseline income, you wouldn’t have the funds to start a side business or invest in property. Therefore, it’s not all negative when it comes to earning an active income.

What Is Passive Income?

In contrast to an active income, another way of earning money is through passive income. This way of living is what many people dream about as it offers you more money for less work and time. 

If the last few years have taught us anything, life is short, and we don’t know how long we all have left. For some people, that is prompted them to pay more attention to their well-being. 

Working less is better for your mental health, and many employees choose a different avenue to make money. But, the question on everyone’s mind is, how to earn a passive income?

Examples of Passive Income

The first thing that people associate with passive income is investments. This is the most common way of making money without working overtime weekly. 

However, another example of passive income is renting out your property. If you have the finances to buy a house or flat building, this could be a great way of earning more money and doing less. 

The only additional costs for renting a property are running maintenance checks and ensuring the property is safe for renting. But, if you attract tenants and pick a good location, you can’t go wrong. 

Having a property you can rent means you can prepare for retirement knowing you have a secure income stream and don’t need to worry about working when you get older.

Here is a list of some alternative options for making a passive income:

  • Affiliate programs 
  • Display advertising 
  • Online courses
  • Social media

All you have to do is find something that works with your lifestyle and build up the correct marketing and financial planning to make sure you can cover any extra costs. 

If you have the finances, you could be cutting back your work hours in no time and enjoying more time with family and friends. The great thing about this income style is that you don’t need to be physically present. 

That means you can watch TV, eat a meal, or even sleep, and money will still appear in your account. The hardest part is switching from an active income and building financial security. 

What Is Better: Active or Passive Income?

When you consider the advantages of both money-making methods, it’s clear that the benefits of a passive income are better than active income jobs. 

After all, who doesn’t like the idea of taking more vacations and having more free time to pursue your hobbies and interests…

But, to get to the stage where you can use that secure financial setup, you need to earn enough bank bills to get started. Unfortunately, that means putting in the work hours to get there.

However, if you’re already at the stage where you have savings and have built up financial security, then looking at ways to minimize your workload should be your top priority.

That’s why buying real estate or using the internet are great options for starting a passive income. The only downside of passive vs active incomes is it might take a while before you can see a steady income stream. 

Apart from taking time to set up, a passive income is an ideal solution for people who have worked past entry-level positions and have a stable income. 

So, if you’re looking to invest in real estate in Memphis, we’ve got you covered. At Memphis Investment Properties, we offer the best real estate in the region. 

You can browse our website and see for yourself. 

Making Money Can Be Easy With Real Estate

When you get older, you want to make time for lying by the beach, reading your favorite book, and being proud of your accomplishments. Buying real estate is one way to earn a passive income for the rest of your life. 

However, there’s no right choice between passive vs active income; it all comes down to your situation. Both money streams can be beneficial for providing a structure and reliable finances. 

But, having real estate is a safety guarantee if you want a passive income you can count on. Give us a call to learn more about our services, and we’ll be happy to chat

Looking forward to hearing from you!