In this final part of "Creating Passive Income Streams, Steve Pavlina continues detailing the factors for creating recurring passive revenue. Make sure to read to the end, as he explains what you need to move forward.
Leveraging Your Skills
Our third criteria is that you need to leverage your skills. It's okay if you're not highly skilled when you're first starting out, but if you wish to generate some serious passive income, then commit yourself to developing some of your skills to a very high degree of competency.
Don't expect to be rewarded for low quality or generic work. If you suck at what you do, you can expect that your income will suck too, whether it's mostly active or passive. Commit yourself to excellence.
Earning passive income doesn't mean you get to rest on your lazy ass and do nothing. It simply means that instead of trading hours for dollars, you'll be using your time to build persistent streams of residual income. It's a good strategy, but it still takes disciplined effort.
Unfortunately there are some unscrupulous marketers who seek to promote passive income as the lazy way to riches. I know a lot of people who earn passive income streams, but I can't think of any who are lazy. They're all hard workers, but they also know how to work smart.
There's no free ride. If you're looking for the easy way out, you'll probably stay broke. You'll also get suckered into buying a lot of info products you don't need, and you'll spend a lot of your working life making other people richer.
When it comes to leveraging your skills, what are you good at? What skills could you develop into major strengths, and how can you use those skills to generate passive income?
For example, if you're pretty good at recognizing the strengths and weaknesses of different houses in terms of their long-term investment value, you could develop yourself into a kick-ass real estate investor. If you're very knowledgable about tech companies, you could develop that skill to become a successful tech investor.
I have a knack for writing, so I pushed myself to become a better, faster writer. This makes it easier for me to leverage this strength to generate streams of passive income. If I was a crappy writer, my income would surely suffer for it.
When you choose a certain strategy for generating passive income, it's important to commit yourself to getting better at implementing that strategy. Become a student of your own passive income streams. Learn from others in the same field. Don't be complacent. Keep reading books, attending conferences, and going to seminars. Be a lifetime learner.
Making a Contribution
The final key to creating passive income is to make a meaningful contribution. If your work doesn't contribute, then essentially you're trying to mooch value from other people, and that isn't sustainable in the long run. Just ask Bernie Madoff.
This is especially important if you're trying to shift your work from active to passive income streams. Ask yourself, How can I positively contribute to the lives of more people than I'm reaching now?
For example, if I worked as a personal coach, that would be an active income strategy. I'd only get paid while I was actively coaching people. My income would be limited by the number of clients I could manage.
If I switch from one-on-one coaching to professional speaking, then I can reach more people at the same time. I could potentially earn a lot more money this way. However, when I'm not actively speaking on a professional basis, I'm not earning income.
But what if I record video of my speeches and put them on a website? Now I can reach people 24/7, and I don't even have to be there. This may not be as intimate as coaching people one-on-one, but it can potentially touch the lives of many more people. With these recordings I now have the potential to generate passive income too. I could post them for free to build web traffic and then monetize the traffic in other ways (advertising, affiliate programs, donations, etc). Or I could sell the videos directly. Or I could license the videos to another company to turn into products, and they could pay me ongoing royalties from sales. There are lots of options.
If you want to generate passive income, ask yourself, How can I provide value to people when I'm not physically there? Passive income comes from passive value. If you figure out how to provide value to people when you aren't there, then it's usually not that difficult to figure out how to turn it into an income stream. All you have to do is ask people to pay for some of that value, either directly or indirectly.
It will take some experimentation to discover the best ways to contribute. You may create something that other people simply don't value, like a product that no one buys. Don't worry about the failures. Just keep testing new ideas. Eventually you'll figure out what works.
Obviously I keep emphasizing the importance of experimentation. Experimentation is critical. You're going to make a lot of mistakes, but that's okay. Every mistake helps you make new distinctions. You won't suddenly wake up in passive income nirvana someday and discover that everything is perfect. You'll always be learning new ideas and tweaking your streams. I've been earning passive income for more than 15 years (and the vast majority of my lifetime earnings have been from passive income sources), but I still feel like there's so much more to learn and to test. I think it's wise to accept that you'll never get it perfect, but you can still enjoy tremendous benefits by getting it mostly right.
Sticking to the Plan
If you want to enjoy the benefits of passive income, then you'll have to make it a priority in your life. It's not going to happen automatically. It will take some effort and hard work. But if you strive to balance the four aspects I mentioned above, then you'll probably find the work motivating and rewarding. You should also feel good about how this work continues to develop your strengths and talents. Yes, it's work, but it's work that feels good.
Let me warn you in advance that society will try to keep nudging you in the direction of active income. If that isn't what you want, then you'll have to muster the strength to stick to your guns. Forget about getting a job. Focus on building a cool life instead.
After I graduated from university, my friends went out and got corporate jobs, while I chose an entrepreneurial path. In the beginning, I struggled to pay my rent while they bought condos and new cars. In the long run, I think my strategy was the better choice. Now I get to enjoy a lot of freedom, while people who chose the active income path are still stuck on the job treadmill. Many of them are now bored and frustrated with their corporate jobs. They wish they had more freedom.
I especially notice the difference when it comes to skills development. My corporate job-wielding friends got really good at pleasing their bosses. They developed specialized skills that they apply over and over to similar types of projects. Their skills development has been very narrow and limited; outside their field, their skills don't matter much. During this same time, I learned how to build successful online businesses, to write well, to speak professionally, to do workshops, to do interviews, to negotiate business deals, etc. These high-level skills give me a lot of leverage, making it harder for me to fail.
This isn't all or nothing. You can still earn active income whenever you desire. I did several 3-day workshops last year, and I recently started offering phone consultations because I happen to like coaching people one-on-one. I earn enough passive income to cover my business and personal expenses, but I still have the option to generate active income if I so desire. Passive income simply gives me more freedom of choice.
It's really nice having a solid base of passive income. It can take a lot of work to reach that point, but it's worth the effort. Most people won't invest the time and energy to go this route, but most of them can't afford to stop working without seeing their income drop dramatically. I think it's nicer to know that you can take a few months off now and then, knowing that your income will keep coming in whether you're working or not. Work because you want to work, not because you have to work.
