I might be crazy but how does 30 days of blogging tips and mom hacks sound? I have a ton of awesome content about how to become a blogger while also being a stay at home mom or working mother. It’s not easy but it’s totally possible. And it’s time for Day 26, where I talk about the difference between passive and active income.
On Day 25 we talked about the four main ways that bloggers make money. Today I want to go a little deeper into the conversation and talk about the difference between active income and passive income. As you grow your blogging business you should be able to quickly identify the difference.
What is active income?
Active income is any way that you generate revenue in an active way. You are trading time for money.
Coaching is an example of active income. If someone purchases an hour of coaching from you, they are going to pay you the amount you established, and you are going to give them an hour of your time. Once the hour is over you can no longer make money from the time that you spent. The transaction is over.
Any job you hold as an employee brings in active income. You are giving your boss your time and in turn, they give you money for that time. The same thing goes for working as a freelancer. You set a price for a project, you do the work, your client pays you, and it's all over.
With active income, once you put in the hour, the transaction is over. And, your potential to make money from that one specific hour again is over. You can only use it once.
What is passive income?
If you find yourself scratching your head wondering "what is passive income?", don't worry, you're not alone. It's a term that is used a lot in the blogging world but not often properly explained. With passive income, you are no longer trading time for dollars. It allows you to consistently make money by putting in the work upfront.
Online courses are a perfect example. You might spend three, six, or twelve months building the course before you publish it. You are spending your time even though no one is paying you at the moment. But once you have it completed you can sell it again and again. That means you can make money on it while you are sleeping, playing with your kids, or on vacation.
Other examples of passive income include things like ad revenue. You do the work to place an ad on your site and then you can forget about it. The ad is out there, hopefully making you money, but you aren't having to continually trade your time in order for it to work.
Let's clear one thing up—passive income does NOT mean you're lazy. You do have to put time into sources of passive income. But you do the work once and then you make money on it over and over again. It allows you to multiply the income that you could have made if you were spending the same amount of time on an active income source.
Once you have put the time in with passive income and get past that threshold, it's an easier way to make money with your blog.
Why it's important to be able to differentiate
You are going to invest a lot of time into building your blogging business up front. You might spend 12, 18, or even 24 months building up content and working on getting readers to your site. Once you have an audience you will sell to them in some way, shape, or form.
It's important that you know the difference between active income and passive income so you can see how much time you need to put into your business and how much you can generate each month. As a mom, it's hard to have active income because we already have our time split between so many different things. That means we don't have a lot of extra hours to trade for dollars. Passive income is what we need!
When I first started my blog, I was running an active freelancing business where I traded time for dollars. Every time I had a client with a project, I would complete it, and they would pay me. Then it was over. If I wanted more money, then I had to go out and do more work. James was a baby and I wanted something more passive to free up some time on my schedule.
When we start a blog, we want to find a way to bring in money faster. And, one of the ways we can do that is by offering freelance services like freelance writing or virtual assistant work. But before you start doing that, I want to give you a warning. I eventually reached a point where I knew I needed to give up my freelancing work in order to grow my business and free up my schedule. If you want to hear more about how I arrived at that decision you can read that in my blog post here.
Passive income vs active income
So, is passive income the best way to go? Is active income bad? Should you only be doing one or the other? No! I don't believe in blanket statements. We all have different priorities, different goals, different personalities, and different schedules.
Income requires time and work. And, as you build your blogging business you are going to be putting in lots of unpaid months to create the framework of your business. You need to be able to look at the differences between passive and active income and see what the right fit for you might be.
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