Living paycheck to paycheck is not fun. Nothing about running out of money during the middle of the month is gratifying. It also is not a time where you can think ahead for the long term. When you live paycheck to paycheck, you are usually trying your hardest to get your life under control.
People have three options to stop living paycheck to paycheck 1) do nothing and continue, 2) start making some extra money 3) build an income stream.
Do nothing. You laugh, but most people figure that living paycheck to paycheck is the Lord’s design for their life. They feel that it is their destiny to struggle and always be in some form of financial hardship. Don’t be that person. In “I Live Paycheck to Paycheck part I,” I discuss the four steps to becoming rich; if this is you, please revisit that article.
Passive Income: Royalties vs. Automation
Start making extra money. Now, this is where things get interesting. Many people feel that earning extra money will save them, but it is just a stop-gap or band-aid in the long run. I’ll explain.
When someone decides that making extra money is the option they want to choose, it usually involves exchanging time for money. Jobs like delivering pizzas, gig work, driving Uber, etc., are examples of time sinks.
My article “What Would Your Life Look Like Without a Paycheck?” dives a little deeper into the concept of building passive income streams. If you are living paycheck to paycheck, there is usually an underlying issue.
It could be from poor budgeting, out-of-control spending, or a spouse or partner with one of these two traits. It is essential to get to the root cause of the issue before you try to apply the bandaid.
You can get to the root cause by performing a root cause analysis. This technique requires you to ask “why” five times or more? It would go something like this:
“Why do I have no money in my bank account?” because payday was ten days ago.
“Why did I run out of money in ten days?” because I didn’t expect to pay $400 for a car repair.
“Why didn’t I have the $400 in savings?” because I have no savings.
“Why don’t I have an emergency fund?” because I don’t make enough money to save.
“Why don’t I make enough money to save?” because I make $20/hour.
“Why do I only make $20/hour?” because I didn’t get my college degree.
Wealth is a Mindset
You can keep asking yourself “why” until you determine what the root cause is. In this case, the person would need to obtain some degree or qualification to increase their hourly wage.
I am not opposed to making some money on the side, but be very careful about exchanging time for money. In the article “Should I Consolidate Debt,” I warned that if you consolidate debt and still have a spending habit, your destiny would be to have even more debt.
The same idea comes back here. If you live paycheck to paycheck and add some extra money by exchanging time for money, you may start to depend on this money. If your budget starts to creep up based on your new job, you will be forced to continue working the extra job. Can you imagine working a second job and still living paycheck to paycheck? There is another way.
My Foray in FOREX (Foreign Exchange)
Create an income stream. Creating an income stream is the most difficult of the three methods. You generate income streams by adding value to someone else’s life. The job of an entrepreneur is to solve other people’s problems at a profit.
The concept of an income stream is to create something that can generate money even when you are not actively working for it. Think about a book or YouTube video. You can make it once, and then it sits there waiting for someone to view or read.
While you wait for someone to view or read it, you are free to continue to conduct other business. If you create enough media and people like your content, then you will have created passive income from royalties.
Now, you can’t create some garbage and expect people to gravitate to your work. In the article “5 Creative Ways to Make Money While You Sleep,” I laid out some ways to build up a passive income from a small business.
The concept of creating value and great content is why most people do not want to go this route to build an income. It is far easier to get into your car and drive Uber than to create multiple blog articles.
But in the long run, the person who can master quality content will end up ahead. The person you become who can envision great content is someone who can always make money. I am in the process of learning more and more about writing and the income streams from it.
Don’t Gamble Your Retirement Away 2
Currently, I have a tiny audience that reads my books and views my blog. But from there, I can keep adding in other ways to add value to my audience. I just started creating “Passive Income Printables” that I sell on Etsy. You can print these items to begin tracking their passive income journey, similar to what I do every month.
There are even more ideas that will continue to jump into my brain over time. The central concept is to add value. Let’s reflect on the person who exchanges time for money by driving Uber. Once the hour is over, they get paid, and there are no more ways to monetize this income. They would have to drive for another hour to receive another paycheck.
When you live paycheck to paycheck, it is hard for you to look above the clouds and see the mountaintop. I get it. However, you have to take a step back and realize that exchanging time money is a losing game.
Crypto Showdown: Bitcoin vs. Ethereum
Building streams of income is not easy. It will require you to learn many different topics, create quality content, and build an audience. And most of the time, you will be doing this while you are working your day job. Who said life was supposed to be easy?
However, I can tell you from experience that it can be magical when you create passive income. I was at work last week and went home for lunch. Between 8 am and 11 am, while I was working, I sold five books on Amazon. I was making passive income while I was at work. Multiple times I wake up to find that I had sold books while I was sleeping.
When you add in passive income from dividends, crypto, an automated business, royalties, and rents, you will have many paychecks coming in daily. It will start as a drip but turn into a stream.
How do you get started with building passive income streams? I would start by looking into becoming a writer or starting a YouTube channel. I say these because they are low-cost, and they will help you build the correct mindset.
Buy and Rent Out an 18-Wheeler Truck for Passive Income
You see, if you take writing, Youtube, art, or music creation seriously, you will become a different person. You will have to learn how to write better, create better videos with lighting and effects, build great beats, or focus on the deepness of creating art. You will have to add value to your audience.
Trust me, over the last six months, I have learned so much that I cannot even describe it. I have written 450 articles; I have a backlog of over 500 more to write. I can look at a picture and create an article and a book from the design concept I envision.
I learned all of this by getting involved in the process of becoming a writer. Here is an article and book I wrote on the topic, “3 Things I Love Being a Writer (book).”
Another good place to start is by learning the concept of adding value. You will need to build the mindset of an entrepreneur first, so start here “Read these 10 Books before You Start a Business (book).”
Finally, read “I Live Paycheck to Paycheck…so I created 300+ Paychecks a Month (book).” It goes into some of my other streams of income.
It is not lost on me that you may be having a hard time financially. I have been there. When I started in the Marine Corps in 1999, I was making $900/month. I get it, and I genuinely appreciate your situation. But take it from me as someone who is getting paid for books every day; work on creating a passive income stream as early as you can. It will need time to grow and flourish.
“Hustle in Your 20s and 30s, and Enjoy Your 40s and 50s” is my new motto. I wish you the best in your quest. Please look over my books on Pinterest and find ones that appeal to you. They all lead to the same conclusion, build your mind and increase your passive income. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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