When I talk to friends/family about passive incomes, there seems to be some confusion. Either they have no concept about the idea of a flawed one. Which makes me ask, “What Does Passive Income Mean To You?” which sometimes elicits a response, “I don’t know, what is passive income?”
Talking about money with friends and family is not normal. It’s like politics and religion; it seems we don’t do it publicly or with decent folk. The above situation is an example of someone who knows nothing about passive income, which is one problem, with an easy solution. Let’s talk.
What Is The Point Of This Post?
The point of this post is to explain my understanding of what is passive income. I have mentally defined passive income based on what I have learned from numerous books, classes, and programs. I had to clearly understand what passive income was to me to establish a goal and measure my performance along the way.
What Does Passive Income Mean?
Easy answer, right? Well, I couldn’t even find the term “passive income” fully defined in the Merriam Wikipedia: https://en.wikipedia.org/wiki/Passive_income
Let’s Break Down “passive income“
First: What is “Income”?
A good ‘income’ definition I found from Merriam Webster Dictionary:
https://www.merriam-webster.com/dictionary/income
A Noun(person, place, or thing) is defined as “a gain or recurrent benefit usually measured in money that derives from capital or labor.”
Last: What is “Passive”?
A good definition I found from Merriam Webster Dictionary:
https://www.merriam-webster.com/dictionary/passive
An adjective(a word that describes a noun) is defined as “induced by an outside agency.”
Now I am sharing my understanding, and I have set my goal, so I intend to keep this as easy as possible. Let’s combine and build a definition for “Passive Income.” – “Induced by an outside agency, a gain or recurrent benefit usually measured in money that derives from capital or labor.”
So in my terms: passive income is an income made by an outside source, outside of me working for it.

Wow, This Was Long. Why?
For me defining passive Passive Income was vital since I have a ‘poor understanding of money. I thought getting PTO(Paid Time Off) was passive income since I got paid without working. The truth is, employers intentionally underpay their employees to fund benefits such as PTO. So any PTO used, I earned. So PTO is not Passive.
The best concept of passive income I had growing up poor was interest earned on a savings account. My family didn’t use banks in my youth because they created an audit trail for welfare investigations. Yes, this might be another post to understand better why I am the way I am.
Are There Different Types Of Passive Incomes?
YES!
First, “Totally” Passive Incomes. Totally Passive Income is income that is derived from no effort of the owner/controller. Like my example of a savings account, once I put money in it, it grew without my action afterward.
Second, “Progressive” Passive Incomes. I don’t like the word “progressive” is wishy-washy to me, but it’s what Wikipedia Used( https://en.wikipedia.org/wiki/Passive_income ). Progressive Passive Income is income that requires some level of managing by the owner/controller. Real estate can be an example if you directly control your properties, which requires input from you to continue the passive income.
My goal is totally passive income. Note: my goal isn’t to toss my money somewhere and never monitor it; no totally passive income still requires some oversight. If you invest in a stock and it under-performs, best to move your money somewhere else.
Now My Goal, Passive Income Generators!
I first learned about passive income generators when I had that secret savings account as a teen. It was a secret since I believe my Mother never reported it to the state during welfare audits, again something for another post. It was a passport savings account; I had the little ‘passport’ stamped into updating the accounts balance information.
As a young man, I would walk down to the bank every month to get my book stamped with the latest balance. A saving account balance that included the latest edition of the monthly interest payment. It was pennies; heck, it might have been a penny at times. But to me, getting ‘free’ money was excellent.
If I got a penny that one month, I would try to figure out how to make a full-time income from savings accounts. I just thought of an easy way to do it; I would need to open 1,000,000 more savings accounts!
I understood the concept of gaining income passively as a young man, but not how to effectively accomplish it. FYI, this was the 80’s, and it was much different than today. Savings account interest rates were higher, inflation(till 2021) was much higher, and my family was on welfare. When I talked about using money to make money, my family laughed at me. We got a monthly check from the state, and that was the limit of their understanding. I was so odd; it wasn’t unusual I was the only person working for a paycheck. But I digress.
What are examples of passive income?
- Rental Properties (Totally and Progressive Passive Income)
- Dividend Investments (Totally Passive Income)
- Business (Totally and Progressive Passive Income)
- Savings Accounts (Totally and Progressive Passive Income Like High Yield Savings Accounts)
- Interest Bearing Securities(like T-Bills, T-Notes, T-Bonds)
FYI, my goal is to be totally passive with my Passive Income Generators.
The point of this post was to explain my understanding of what passive income is. It’s not PTO(Paid Time Off), it’s not receiving a monthly check from the government, it’s not busting your butt for a benefit you might not live long enough to enjoy. It’s actual income that comes to you without you having to create it. Here is the cliche, it’s making your money work for you.
Later in my posts, I will discuss how I am and have tried to create a passive income network and specifically address questions like:
How can I make passive income with no money? (since I started with no money)
Beginner passive income? (Gotta start small for those first successes)
How can I make extra money while working full-time? (Since the extra income can be used for feeding your PIG’s)
How can I make $(???) a month passive income? (since we have monthly expenses and that’s a goal we should all work towards).
What are Smart Passive Income Ideas? (Now using bigger money for bigger returns).
I hope this helped you understand my goals, so you better understand my goal for this blog. My family and friends only don’t fully understand my financial goals, and I hoped to chat with similar-minded people. I’m getting older, and working for money is starting to take a real toll on my body; I need my money to work for me.
Comment below to offer your feedback; I’m a constant student and would love to learn more. We all have the same goal, but there are so many ways to get there. Thank you.
![]() Myself with an interesting Bull Sculpture. Notice: No Lambo’s. :/ | Hi I’m Tom, A Blogger And A PIG Farmer. PIG Farmer as in I grow Passive Income Generators(PIG’s). I’ve been playing with stocks, mutual funds, and options for decades, as well as always working on my side hustle stacks. Unlike what you read online, I’ve yet to find a way to get rich quickly. Get Rich Quick isn’t happening for me. My journey has been long and continues. I hope to have so many PIGs I can stop working at my current job and volunteer as a medical worker overseas. Still waiting, but getting there. I still am a family man, and while on this Journey of Growing PIGs. I wanted to share my adventures(ups and downs), hoping you will contribute with your feedback and comments. Fun Fact: In my spare time, I am a Band-Dad! |