“Freedom,” Tresidder says when I ask him this question. “When zero of your money is passive income, that inherently means every minute you’re not working, you’re not making money,” he says. That’s the money you’re actively working to make, like at your day job. Hines compares passive income to its counterpart, active income. However, he admits it’s been a longer and more difficult process than he thought (think: the time required up front). He first heard the term years ago and was immediately intrigued. The income is lagged.īrad Hines, another big fan of passive income, estimates about 10% to 15% of his income is passive. He describes it as a machine you need to build the machinery before the machine can work without your assistance. “Often in passive income, you have to commit the time and energy up front,” he says. Tresidder defines passive income as, most simply, “income that comes in without regard to your time.”īut - and this is a big “but” - it’s not mailbox money it’s not money that just appears. In fact, he has several passive income streams set up. Todd Tresidder is a wealth coach and the founder of Financial Mentor. To get the best understanding of passive income, I chatted with some passive income experts. If you’re interested in establishing a flow of passive income, here’s a guide to understanding the term and getting started.

However, it’s a viable way to make money, and offers you security and freedom. Just like you can’t pluck money from a tree, you can’t expect to earn passive income by being, well, totally passive. Unfortunately, that’s a common misconception. It sounds appealing right? According to the definition of passive, it would mean you’re earning income without participating or having to do anything at all. You’ve probably heard the term passive income. Learn more about how we make money and select our advertising partners. We provide you with accurate, reliable information.

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Passive income definition