What Is Passive Income? – FAQ

This question might be simple to answer, but to cover it here on my blog, I want to define how I use it and help you better understand my goals. This way, you can know what I mean by Passive.

Passive Income Money Raining.

What Is Passive Income?

Let’s take the latter part of the question since it will be the easiest to answer.

What Is Income?

Income is money received through work or investments. As you can see, income can be obtained through active or passive means like investments.

On this blog, I intend to focus less on earning money actively but passively.

Dictionary.com defines income as: https://www.dictionary.com/browse/income  

What Is Passive?

Now, ordinarily passive means no activity or inactive. 

Dictionary.com defines Passive as: https://www.dictionary.com/browse/passive

For this blog or my intentions, passive means I don’t have to be active. For example, if I choose to do nothing, I do nothing for some time. You can take a vacation, or a mental break, without worrying about being inactive.

This may be weird to understand, but as we get to putting Passive and Income together, I can better explain this.

What Is Passive Income?

Passive income is where income occurs without activity.  

Just in-case, Wikipedia defines Passive Income as: https://en.wikipedia.org/wiki/Passive_income

Let’s first flip this.

What Is Active Income?

This is income that depends on active work.  

Example: When I go to work, I punch in, work for several hours, and then punch out.

My income (or paycheck) was based on my active involvement in working, starting when I officially started working, punching in, and stopping when I officially stopped working, punching out.

I do not continue to have an income during my off time. So no income during inactivity and income only during periods of activity.

So again…

Finally, What Is Passive Income?

It is income that continues during periods of inactivity. Consistent income is independent of my being constantly active.

Did this make sense?

Let me give an example.

If I do work at my job and make money, active, and take that money and invest it into, say, buying dividend-generating stock.

My paycheck was active income, while the dividends from my stock purchases were passive income. The dividends are coming in, regardless if I work or not. So, passive.

So, again, passive income to me continues without any activity from me. I might have to work or be active to generate the resources initially. Still, the income from those resources is passive if they create an income without my activity.

More Passive Income FAQs:

Leave a Comment