Many of us know what active and passive income are, but for those that don’t, the former includes money earned from your job or career via an hourly wage or an annual salary. The latter is income earned from investments or other business ventures, via interest, dividends or profits, or, from selling ’em at a profit.
As someone with limited means and even less investments, I’ve figured out a precommitment strategy that will limit my future discretionary spending – always a good thing – and force me to do whatever I can to create passive income streams of my own. More on those in another post.
This idea came to me after a discussion with a Make More Monie mentee, who is considering buying a dog. I suggested that although it sounds like a lot of fun and possibly a worthwhile expenditure, he may want to secure his business career first, as in order to be successful in it, it is going to require long hours. Not exactly the best scenario under which he would have to look after a social pet – for either of them.
I reminded him of the long hours he spent in school, studying for all of his exams and working on projects, just to be able to graduate, all so that he could then be considered for a career in his chosen field. Then I reminded him of all of the time and effort spent in networking, all in the hopes of meeting those that may put him in touch with others that may be looking for someone with his skill set.
In addition to all of that effort, was the effort put into customizing the hundreds of resumes submitted to the hundreds of websites posting opportunities. That customizing, which needed to be tailored to the specifics of the company and the position applied for, all required painstaking hours of additional wordsmithing in an effort to “beat the bot” scanning the hundreds of competing submissions. Lastly, we talked about all of the angst-ridden days – not to mention the sleepless nights – preparing for those rare interview opportunities just to be one of the last few standing, all but one resulting in his being summarily dismissed for any number of potentially trumped-up reasons.
I let him know that now that he has made it this far, it is no time to be complacent, as he is once again going to have to dig down deep. For now, if he is ever going to be promoted into increasingly-coveted positions of responsibility whereby he will be able to “make more monie”, he is going to be tried, tasked, tested and taxed by his higher-ups to step up. For these trials though, if he answers the call – which I know he surely will – he will undoubtedly be generously rewarded.
I suggested he employ a precommitment strategy; one which I am employing myself in my own life with any and all discretionary spending. The approach is in the form of a precommitment that, for any non-essential purchases — such as a pet dog — he uses only money generated from passive income.
My thinking is that this serves at least two purposes. The first is that it brings time into the equation; time for him to consider the pros and cons of such an investment – in money, bandwidth and energy – more carefully, and the second is that it provides the impetus to continuously be in a heightened state of awareness, looking out for elusive, but not impossible to find, passive income opportunities.
Lastly, I reminded him that before he can provide a good home for his potential best friend, one full of social interaction and a great yard for his pal to fetch a stick in, he needs to secure one for himself!
Note: When you have made the conscious decision to really succeed, Make More Monie will endeavor to provide you with plenty of real-world examples of individuals that have “made more monie”, and who are happy to share exactly how they did it. No throbbing music, no pounding of chests and no primal screaming. Only top-of-the-line ‘fun’ancial mentorship with bottom-line results!
Disclaimer: The information contained herein should not be construed or considered professional advice. Nonetheless, thanks for reading! If it resonates, there’s “plenty more where that came from” on Facebook, Instagram, Threads, X ‘n’ YouTube.