When most people think of financial freedom, they think of being debt free. Being debt free is nice, but that’s not financial freedom – it’s actually much better.
Financial freedom is when your passive income exceeds your expenses. It doesn't mean you're debt free and it doesn't mean you're rich either. But to fully understand, we need to look at the types of income.
Types Of Income
Active income is income for which you actively work. This is the most familiar type. A job is active income. If you stop working, you don't get paid. The only way to increase your active income is to ask for a raise or switch jobs. You don't have much freedom here.
Passive income is any income that you receive without “working” for it. Rent from a rental property is a great example of passive income. To get it, you purchase a property and rent it out. The resulting profit per month is passive income.
Portfolio income is another type of passive income — it is income gained from investments such as stocks and bonds.
Commissions and residual income are technically considered “active income” but for our purposes they are special snowflakes. A commission is income you get from a sale. You have to actively work for commissions, so from that perspective, it is considered active income. It is special, and can become passive when you have a loyal customer who re-orders their products on their own. You have to work up front to get the initial sale, but the resulting sales are somewhat automatic. For network marketers, residual income is the earnings you get as a result of the sales made by your team. Compensation plans vary, but in most cases, sales in your organization are given a point value, and the accumulation of points will result in a payment. Again, this is a hybrid. Do you have to work to build your team? Is there some level of leadership and motivation involved in helping them succeed? Absolutely. But eventually, your team grows on its own as you gain more leaders, and the residual payments grow.
If you are in online or affiliate marketing, you may get commissions from sales made online. Typically, that means you put out some content online — an ad, a web page, blog post or some other content that contains the link to the product you want to sell. Again, there is some work involved getting that set up and then distributing the content. The internet though, lasts forever. Your links live on, and there are plenty of people receiving commissions from links that they placed years ago. Do the work once; get paid over and over again.
When your income is made up primarily of your business income — from recurring commissions and residuals and other passive income sources, then you are receiving a check without having to go to work and report into a boss. In fact, in network and online marketing, you can take the day off and still receive a check! If you take those earnings and invest in passive income sources, then your passive income on a monthly basis will grow. When that amount exceeds the amount of your expenses, then you are financially free. That means that if you do not work, you will still get paid and your expenses are covered!
…And That Doesn't Make Me Rich, Why?
Because you can be living off of a modest $50,000/year income – or some other amount that most of us wouldn't consider “rich”. If your passive income sources exceeds $50,000 then you are financially free! You don't have to go to a job to earn that $50k. But you're not rich.
So What About My Debt?
Debt reduction is important and you should actively work on eliminating your debt! In fact, if you do, then your expenses go down and you have more disposable income (income left over after paying your bills and living expenses) to enjoy.
But I Want To Be Rich!
Great! And if you want to be, you can be! But first, get to financial freedom. When you are financially free, you give yourself the precious gift of TIME. And with that time, you can work on growing your business, getting multiple streams of income and then investing in other passive income sources. When you do this, you are leveraging your time and money and then your income grows exponentially. It's like a snowball effect. I little turns into a lot quicker than you think after you obtain financial freedom.
How Can Network Marketing or Online Marketing Help Me Be Financially Free?
Online and network marketing as a business is a lot of work — I'm not going to lie to you. In the beginning, you may think it's no different from a job! However, the hardest work is upfront. As you gain skills, it gets easier and less like “work” and more like fun! Additionally, utilizing online strategies leverages your time so that your success is based upon upfront effort that you just maintain. Most top earners do NOT work full-time hours! Sure, at first, they might have to build their business. But eventually they scale back and can get just as much accomplished in part-time hours as beginners do working full-time.
So you sacrifice a small investment and some free time. Work smart and hard. Soon, your income will match and eventually exceed your salary and you can fire your boss. Then, you can utilize those found free hours to double and triple your income in a shorter period of time. You become financially free, then debt free, and then, (if you choose), you can become rich.
It sounds simple because it is. But it's not easy. I have faith in you, though. If you have the right desire, attitude, willingness to work hard and be coachable, you can do it!
I hope this helps. If it did, please comment and definitely share!
To Your Victory,
Email: [email protected]
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