Work At Home Mom Should Look For Passive Income

I don’t really understand what is the meaning of Passive Income when I start to be a work at home mom and also a newbie to home business. However, when every people say it’s a century to work for passive income, I did some researches for this word.

Here’s the definition from Wikipedia and About.com:

Wikipedia
Passive income is a rent received on a regular basis, with little effort required to maintain it.

Some examples of passive income are:

  • Earnings from a business that does not require direct involvement from the owner or merchant;
  • Earnings from internet advertisements on websites;
  • Residual income, repeated regular income earned by a sales person, generated from the payment of a product or service, that must be renewed on a regular basis in order to continue receiving its benefits;

About.com – Entrepreneur

Passive income is income that does not require your direct involvement.

If you want to earn more, work less, and have a decent retirement, you’re going to have to start creating income streams that do not require your direct involvement.

And many more definitions that you can easily get from Google or Yahoo search.

One type of passive income is recurring income (residual income) which allows you to get regular income monthly or yearly. Passive income is definitely a key to financial freedom but it takes time to build. It won’t take you a month or a year to reach financial freedom but if you continuing working on your passive income, you will get the results. Therefore, the earlier you start, the sooner you enjoy financial and time freedom.

If you are a work at home mom and want to choose some programs to join and earn money online, let me share with you an example (assuming quality of product is equal):

Program A
Subscription Fee – $20 per month
Recurring commission – 50% per referral ($10 per referral)

Program B
Subscription Fee – $100 one time payment
Affiliate commission – 50% one time payment ($50 per referral)

I believe most people will choose Program B because of the one time payment and you see the immediate higher commission when refer a friend to the Program B. However, when you think further, what happened to your commission if you stop refer people to Program B? You will get zero income!

Let’s make an assumption that you refer 10 people to Program A and 10 people to Program B.

After one year Program A:
Your recurring commission: $1200 per year ($100 per month)
Deducted your subscription fees per year: $240 ($20 x 12 month)
Net Income = $960

And you will continue to get the income every month without your direct involvement – this is Passive Income.

After one year Program B:
Your commission for 10 people: $500 (as the commission is $50 per referral and it is one time payment)
Deducted your one time subscription fee: $100
Net Income = $400

And you have NO INCOME if you stop working on Program B.

With the same effort of referring 10 person to a program, Program A lets you enjoy Passive Income while Program B need your continuing effort to work hard on it and get more people to join. Imagine you want to have 1 or 2 months holidays without your involvement in your online programs, which program will continue to give you money? In the long run, which program will benefit more? I believe you are a smart mom who knows the answers. :)

It takes time to build passive income because you won’t see the results immediately unless you are very lucky. However, it’s worth for you to go ahead to look for Passive Income.

Programs that offer recurring income:

Comments on Work At Home Mom Should Look For Passive Income Leave a Comment

July 14, 2009

kelly @ 11:31 pm #

Hi Moon

Thanks for the clear explanation on passive income. It give me a clear picture now and know what to choose for when I to join a program.

July 15, 2009

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