Creating wealth is a fairly simple relationship between time and money for Passive Income. Time is the most valuable commodity. It’s only 24 hours a day. Time can never be recreated or re-used. It existed once, then it disappeared. And that’s why building a passive income is so important – because time is more valuable than money.
Even the richest man in the world cannot replace the time he has lost or wasted. Time certainly does not discriminate. It’s the biggest equalizer, we all have limited time and can’t buy any more.
Time is money
Time is credited as the most valuable commodity. So precious that you can’t buy more. Once lost, it can never be refilled. Time is also the commodity that people most often waste. Every activity we do in this world, such as jobs, business, learning skills, building relationships, watching movies, hanging out, clubbing, etc. requires your time in return.
The average life expectancy in Pakistan is 25000 days, if you are 40 years old, you have already lived 14600 days and only received 10400 additional days. Considering that most people work for a living, exchanging time for money, this precious commodity must be prioritized.
Before we move on, it is important to understand the concept of financial freedom.
Financial freedom means having savings, investments and money to provide the kind of life we want for ourselves and our families. It means increasing our passive income to enable us to retire or pursue the career and dreams we want instead of being driven by our need to earn a fixed salary every year. When you are financially free, you let your money work for you rather than vice versa.
The road to financial freedom is not a get-rich-quick strategy. And financial freedom does not mean that you are “free” from the responsibility of managing your money well. All bad. Having complete control over your finances is the result of hard work, sacrifice and time. And all the effort is worth it!
Types of income in relation to time
There are mainly two types of income:
Active income
Active income consists of income that you earn while you work full-time or run a business. This type of income involves a direct exchange of money for valuable time. This involves the time it took you to acquire that set of specific skills that made you suitable for that particular job or business.
Passive income
Passive income is income from real estate, rent, limited partnership, dividends, shares or other businesses in which a person is not actively involved. Maybe become more productive without spending a lot of the most precious commodity you have “TIME”.
The purpose of passive income is to make money while you sleep. Here’s how to make your assets work for you. You invest time in building something ahead that will generate revenue along the way with little effort on your part.
Building Passive Income is the most important factor in getting rich. This eliminates your ability to earn from the limited time you have in one day. With passive income, you make money while you sleep. You also make money while you’re awake. It’s automatic and just keeps coming in.
The strategy of wealth creation
For almost all people, active income is the primary source of income. This is a direct exchange of time for money and how much money you earn will depend on your skill and time spent. However, not all of you will be able to create wealth and achieve financial freedom. That will depend on how you use this income. Will you create more liabilities by buying desires and or assets that earn?
Let’s see what happens when one small step in your entire strategy can completely change the outcome. And like two people with similar active income, one can end up with one achieving financial freedom and the other living wage to wage.
The triangle of desires
You exchange your time for active income and use the money you earn to buy things you want. Bigger house, better car, travel and so on. On the contrary, all these things need more time and money while saving them so you go back and forth exchanging more time for more money, and continue this triangle of desires until it is too late.
Unfortunately, most people live their lives without realizing that every day, minute, or hour means they have one less day, minute, or hour to use. They unconsciously treat time as an endless resource, thinking they are immortal.
Many of us get stuck in this triangle of desires, living paycheck to paycheck. And unable to save enough to build any acceptable passive income stream.
Our energy is finite, and you can only do so much to become more productive. It is much easier to stop wasting time than to become more productive.
Road to Wealth
Just like before you trade your time for active income, but this time use it to invest in an asset that gives you passive income. You use this passive income to feed your desires to change one basic dynamic in the whole circle of wealth creation. Instead of buying your wishes directly you buy them and save them with your passive income. A little patience for a moment will become a lifetime of success and wealth.
Your time now increases as you make money working for yourself. Your passive income supports your desire to consume your money earned from automatically generated passive income, as a result, you earn more time. The time you save is then used to earn more active money or build a quality lifestyle.
Eventually, you achieve the financial freedom you have always dreamed of, breaking the chains and finally becoming free.
Why Passive Income Matters
“If you can’t find a way to make money while you’re sleeping, you’ll work until you die.” – Warren Buffett
The get-rich-quick virus keeps most of us engaged in activities that end in failure. Every day I get calls from people who want to invest in real estate with the hope of earning quick bucks, believing that there is easy money waiting to be reaped by those who know where to find it.
Nothing can be further from the truth unless you happen to win a lottery or if you were born rich. There is nothing easy about getting money. The only way to get rich is to build a solid infrastructure and feed your assets.
Passive income is a cornerstone of a rich growth strategy. Having a solid income base that does not require active management can keep a steady stream of money for your portfolio or living expenses. With a certain amount of income set on autopilot, you can take more aggressive investment attitudes elsewhere with a little more comfort, and help protect your profile against market volatility and economic recession.
What’s more, you only have so much time to invest in making money — whether it takes the form of a job that generates income, or active money management with other investments. Once a passive investment flow is established, it is a kind of fixed-and-forget-it asset. Basically, generating wealth does not take time on your part.
Stay tuned to Feeta Blog to learn more about Real Estate Pakistan.
