Why you should make money while you sleep

Warren Buffet once said, “If you don't find a way to make money while you sleep, you will work until you die.” The takeaway from this quote is to create income streams that generate income regardless of whether you work that day. If you get sick, go on vacation, or want to take some time off, your income should continue to flow in. In this context, income can be thought of in two ways; active and passive.

What is Passive and Active Income?

Passive income is money earned on a consistent basis from previously completed work or a job that takes little to no effort on a daily basis. Passive income is a consistent cash flow that provides security over time.

When it comes to active income, you don’t earn if you don’t work. Active income is generally your salary and wages that you get in exchange for some work. You have to work consistently, and continuously.

Take a cricketer for example. He’ll probably play the sport and earn money through that for around 10 years. This is his active income; playing cricket is his livelihood. The money he makes through endorsements, investing in companies, and building his brand is his passive income. If he depends solely on playing the sport and somehow ends up injured, he’ll lose his ability to earn. That’s precisely why passive income is so important — because time is more valuable than money. Moreover, passive income frees up your time to continue working towards your passions and interests instead of working aimlessly. There’s no point in being a money-generating machine if you are too exhausted to enjoy it.

People build their passive income gradually, and in many ways. Passive income can be investing in stocks, or mutual funds, it can be renting out a property or it can be buying crypto. Passive income is what makes the rich get richer, and it is what differentiates them from the majority. Having a stable stream of passive income will reduce your dependency on a paycheck, and it will improve your financial consistency.

To set yourself apart from most of the crowd, building consistent streams of passive income is essential. You break free from the chains of a soul-crushing 9-to-5 work schedule and begin to embrace a more fulfilling existence. We all get the same 24 hours in a day, and most of us will probably end up working 9-to-5 jobs. It’s what we do with the time that we have remaining that matters most.

Adithi Ananth

Adithi Ananth is a Content Writer at VentureX, SJCE. She's currently pursuing her Bachelor's in Industrial & Production Engineering. She's one of the sweetest people you'll find on campus.