How to Create Passive Income 104: For The Average Person

Passive Income is a word that most average people are not familiar with in America and other countries. It’s not our fault because our parents taught us to “work for money.” Indeed, our parents, education system, and society taught us how to become great employees.

The problem with being a good employee is we start to believe the only money we can earn is through our employment. We strive to obtain promotions at any cost, sometimes at the expense of family.

Yes, most of us will need to work a job throughout our lives—there is nothing wrong with working. However, it’s the mindset of an employee that will ultimately drag down our lives and our income. 

Passive income is the answer to our financial woes. We can build additional income streams that supplement or overtake our everyday jobs. Here are some of the uses for passive income.

1. Purchase goodies. You can build a small dividend portfolio to pay for your monthly coffee and energy drinks.
2. Supplement income. Your cryptocurrency interest can pay for your dinners when you eat out with family. 
3. Pay expenses. A small passive business can cover the monthly costs to run your household.
4. Beat inflation. Building an income portfolio can help you beat the 5% inflation we expect over the next few years.
5. Invest for your children. Once you build your dividend growth portfolio, you can leave the entire income stream to your children. 
6. Fund your lifestyle. Ultimately your various passive income streams can pay for your entire lifestyle.
7. Retire early. If you understand passive income early, you can build a diverse retirement income portfolio, dividends, crypto, real estate, royalties, and automated businesses that can set you free.

I spent the last week taking a deep dive into the world of passive income. The result is the How to Create Passive Income Series (Beginners, Intermediates, Advanced). Each article will teach you how to start “thinking” about your income streams.

That’s right; there is no one size fits all passive income stream for everyone. Everyone has different risk tolerances, available time, family requirements, talents, etc. Your income streams will be vastly different from your twin brother or sister (example). 

Once you understand the words passive income, it is time to start reading about the income sources you are interested in building. Reading is the key to success in passive income and life in general. 

Getting started as an average person. The average person doesn’t view their free time as the time to make money. Instead of falling into investing, they are watching Netflix and playing video games. 

The first step is understanding that your free time is valuable in building wealth. There is a quote that goes something like this, “You want to see the difference between the rich and the poor, look at how they spend their free time.”

The eight-hour mindset destroys wealth creation. We believe that working our little 9-5 jobs will set us free, but it makes our financial situation worse. We feel secure that we will always have a job, and then we begin to spend money that we haven’t earned yet. That toxic spending is called debt. 

For some reason, we do not live below our means. We want to have nice cars and homes, all funded by our 9-5 jobs. The more we spend, the more we work. It is a vicious cycle that consumes 95% of Americans. 

Becoming different. The shift in mindset from earned income to passive income is akin to the change from employee to entrepreneur. It is tough to shift the perspective to that of an entrepreneur, where you are entirely responsible for your income and lifestyle. 

Most people can’t make the shift, and as a 22-year veteran of the military, it was hard for me as well. They don’t teach us free-thinking in the military, so it was exciting to move into a world where I was entirely responsible for building an income. 

Here are a few books that helped me form the correct mindset for passive income. Keep in mind that each income stream (dividends, real estate, royalties, business) has its own books to read as well. However, forming an overarching view of passive income is more critical than individual streams.

1. “Passive Income Aggressive Retirement”
2. “The Passive Income Myth”
3. “How to Make a Living with Your Writing”
4. “The Millionaire Fastlane”
5. “Unfair Advantage”
6. “Creating Income Streams”
7. “The Compound Effect”
8. “Limitless”
9. “Smart Couples Finish Rich”
10. “Effortless Money”
11. “I Will Teach You to be Rich”
12. “Rich Dad’s Guide to Investing”

Forming good money habits. You can’t become wealthy if you don’t value your money. Notice I didn’t say “love your money.” The love of money is the root of all evil. When I say value your money, I mean appreciate every dollar that comes to you.

You don’t have to hold every dollar tightly, but each dollar needs to serve a purpose. Each dollar should pay expenses (that you should be keeping low), spend time with family (family time), or invest into assets (business, crypto, real estate, dividends).

The more you read, appreciate money, love your family, and learn about passive income, the more your income will grow. I have read 70 books in the last 14 months. At the same time, we paid all debt, and our investment account went from $44,000 to $200,000. Coincidence?

I have tons of resources available to assist you on your journey. Remember, I write 1,000 words every day, so I have written 660+ articles over the last year.

If you are on Kindle Unlimited, I have many books to get you started with dividends, real estate, business, cryptocurrencies, and mindset. Here are some of my resources available on Kindle Unlimited:

1. Financial Mindset: Become CEO of Yourself (Amazon)
2. Retirement Planning: Retirement Planning at Any Age (Amazon)
3. Investing: How We Plan to Retire on Dividends (Amazon)
4. Cryptocurrencies: My First Book on Cryptocurrencies (Amazon)
5. Real Estate: Financial Independence through Real Estate (Amazon)
6. Business: Retire Rich, Retire Comfortable with a Business (Amazon)

If you are not on Kindle Unlimited, don’t worry, I have been building my supply of free books that I host on a website. It is essential to say that I also upload these books to Kindle under the series “Free Investing.” So any book you see there, you can download on my website. Here are some free books on my website Military Family Investing: 

1. Financial Mindset: What Limiting Beliefs Do You Have About Money? (pdf)
2. Retirement Planning: Retirement Planning for the Average Person 2 (pdf)
3. Investing: How We Plan to Retire on Dividends 2 (pdf)
4. Cryptocurrencies: The Magic of Cryptocurrencies (pdf)
5. Real Estate: Should You Manage Your Own Rental Properties? (pdf)
6. Business: Retire Rich, Retire Comfortable with a Business 2 (pdf)

Conclusion. There is only one way to build passive income, sacrifice some time early on for long-term benefit. We call this delayed gratification. I recommend starting with books about financial mindset and building your habits.

Then proceed to individual income streams like royalties or dividends. It is time to settle in for the long haul, as building an income stream takes time and patience. But once you hit some big numbers, the process will hook you. 

Please join my Facebook Group if you want the latest articles and free books delivered to your news feed. Also, you can contact me inside the group and ask questions. I also have a Facebook Page where you can see my latest articles.

1. PDF of the Month: How We Plan to Retire on Dividends 2 (165-Page Free PDF)
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5. Investing: The Pros and Cons of Dividend ETFs (Free PDF)
6. Cryptocurrencies: The Magic of Cryptocurrencies (Free PDF)
7. Real Estate: Real Estate is a Mindset (Intermediate) (Free PDF)
8. Business: Retire Rich, Retire Comfortable with a Business 2 (Free PDF)
9. Everything!: The Biggest Book on Passive Income Ever! (book)(Web Edition)(Art Edition)
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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. All Right Reserved Military Family Investing