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Step 1: Time and Money
Passive income comes from passive income assets there are three ways to create or buy a passive income asset.
- Invest capital upfront
- Invest time upfront.
- Invest both time and capital upfront
The choice is easy when you know the capital and time you can commit. Time by itself does not mean much. Time invested can be amplified when combined with expertise and efficiency. Learn more on how to become ultra-productive.
Step 2: Knowing yourself
Capital is easy to measure. This is calculated by your total worth. In addition, you can include your ability to borrow money from the bank and from your friends and family.
Capital is numerical and factual, the rest of you is analogue. Meaning your energy and focus will tend to vary from day today. You excel in some tasks and topics but not in others. These things are important because you want to set up yourself for success. Leverage your strengths and mitigate your weaknesses. These are some primers to help you explore.
Passive income is passive once the asset is in place, but before there is a lot of work that needs to be done. If you plan to build a passive income asset which needs a lot of time upfront, be aware of your history befor you start.
- Why would you like to have a passive income?
- What are your other strengths and shortcomings?
- Do you like dealing with people?
- Can you sit in front of your computer for a long time?
- Are you prepared to wake up one hour earlier each day for the next 24 months?
- How do you deal with failure? Can you pick up after failure and rebuild differently?
- What is your tendency to procrastinate and abandon projects halfway through?
- How committed were you in pas projects. In particular, those projects which took time away from the stuff you like doing.
Step 3: Choosing and researching your passive income project
Understand what is passive income. After having clear answers to both step 1 and step 2, step three is easier. You know what kind of assets will have the highest chances of success for your specific strengths, resources and weaknesses.
Look at your passions first, brainstorm if these can be turned into a passive income asset. If you get stuck research the traditional passive income assets and then make them your own. Create a different twist on them if you can.
When setting your goal it might be a good idea to research similar projects and see what were the biggest risks. If you are investing in a tree farm in Cambodia, how many success stories can you find out about this passive income asset on the internet?
What kind of passive income would you like to get out of your project? There are eight forms of capital, choose which one would you like to passively accumulate.
Step 4: Set Goals
If you embark on this process, the important thing is to see where you want to get at the end, if you are hungry enough you will figure out a way on how to get there. Your goals should be like signposts to your end goal. Each one will help you build confidence to get to the next checkpoint.
Breakdown the goals into subgoals. Baby steps! If you are planning on investing in dividend stocks, create a schedule on reading one annual report every three days or every week. If writing an eBook is more your thing than writing 2,000 words a week. If you plan to become a create a youtube channel [LINK] then produce one every five days and improve it by 5% each one you do. If you want to invest in Masternodes, then plan to read at least two articles and spend 20 minutes on discord groups a day.
Take a step further and block your agenda or commit to a schedule. Keep track of your commitment.
Step 5: Review your project as efficiently as possible.
Passive income projects need different kinds of attention some weekly some monthly and some yearly. Reviewing them more than you have to defeats the purpose of passive.
You are reading this because you would like to earn a passive income, so it is about being efficient. The fisherman who checks his traps every minute will never be able to go on the beach and rest. Find out the optimum time to check, and agree with yourself the amount of less you are ready to lose if things go slightly weary while you are not looking.
Set reminders keep notes so when you need to check in again, you know where you have left off
Step 6: Create your success criteria
Success criteria are factual points which define personal success. They are there to let you know, that the peak is attainable and within reach. Without a success criteria is hard to know when to stop.
Some examples include:
- The total amount of passive income generated
- Total percentage of your expenses paid by this project.
- Impact and influence generated
- Time or energy spent on this project.
Evaluate the returns and do not accept them as they are. Get creative on how to optimise them.
Step 7: Scale
You made it. Your passive income asset is working and chugging along. Some investors might want to choose to scale meaning cloning their passive income asset several times so they can replicate their passive income. Instead of having just one rental property why not have ten. What are the systems that can make this possible? Can you turn a semi-passive income asset or idea into a fully passive one? How can the passive income system be tweaked to make it even more passive so many assets can run in parallel with minimal intervention?
In the comments below, please let me know your thought process around creating and maintain passive income assets. Happy to hear your ideas!