It’s no secret that the cost of retirement is going up and the age of people retiring is increasing as well.
What does this mean for you?
It means fewer years of enjoying your hard earned money like you originally planned.
That’s why it’s so important to set up passive income streams to help improve your life.
Here are several reasons why it can be helpful.
1) Lower Costs
What’s the difference between passive and active income? Active income (ie your job) takes up a lot of your time and effort, right? But what you may not pay attention to is the financial costs associated with your job. With active income, you’re paying taxes on your salary along with insurance and other costs before you even see a paycheck.
If you commute to work, the costs of fuel can add up over time, along with the car payments, insurance, and maintenance costs.
That’s one of the benefits of having a passive income. We know what you’re thinking. Don’t you have to pay taxes on passive income as well? The truth is that some passive income options will still require taxes, but the amount you pay would generally be less than your salary.
2) Greater Mobility
Let us ask you a question, are you happy where you live? Oftentimes when we choose where to live, it’s based on where we work. We try to make the commute as short as possible, sometimes trading a longer commute to be able to put our families in a better school district or other considerations.
But what if we told you that you didn’t have to be tied to a specific spot? With many different passive income options like investing, blogging, videos, rentals, and others you can manage them from almost any location.
With a passive income, you can spend more time in places that you want to visit. While having retirement savings can help with this, eventually it can run out and you will have to apply for online loans or borrow money from your friends or family. By retirement, most people have less than $100,000 in savings. But with a steady passive income stream, you can spend time doing what you dreamed of for long.
3) A Steady Income Stream
How many hours are you working this week? What is the electricity bill going to cost next month? Our daily lives have a lot of uncertainty in them.
Let us ask you something. What happens when you aren’t able to work? Some of us are lucky to have sick days or disability insurance, but eventually, that runs out. Here’s where a passive income stream comes into play.
Take a look at a rental property. Assuming that you’re getting the rent on time, and the property is occupied all year, you can count on a steady amount of income on a monthly and yearly basis.
Knowing how much money you’re expecting can be helpful when you’re living on a fixed budget. With multiple passive income streams, you can build up enough passive income to support your various expenses.
4) Doing What You Enjoy
This may be the most important reason on this list. Have you ever wanted to make money from your favorite hobby or pastime? What if we told you it didn’t have to take up all of your time?
Thousands of people have turned to the internet to find different ways of making money doing the things you do.
Take for example woodworking. There are several ways to create a passive income stream from this hobby. If you start a woodworking blog or video series, you can make a passive income stream from earning advertisement revenue from clicks or views.
You could also create courses for people to purchase as downloads. The best part is that you can share your knowledge with people who are excited about the same topics as you.
Some people choose to create on-demand courses so that people can download and view them in their own time. It takes some work up front to set up the courses, but once you have them set up, you can let your courses do the rest of the work for you.
Conclusion
We hope that you enjoyed these four reasons how passive income can help to improve your life.
It was important for us to find methods that you can relate and use in your daily life.
Like you, we’re always looking for ways to improve our free time without sacrificing our income.
What do you think about these four reasons? Do you have any other reasons that you can think of?
Tell us in the comments below, and we invite you to share this article with your friends and family so that they can use these reasons in their own lives.