Active Income and Passive Income.
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1. Active Income
How do I define active income? You exchange your time for money.
A skilled laborer exchanges one day of work for P500.
A manager exchanges one day of work for P5000.
A dentist will pull your tooth for P600.
A heart surgeon will do a bypass for P300,000.
What do they have in common? All of them exchange time for money.
When they stop working, they stop earning.
Let me give you an example.
Ate Guy is the terrific masseuse of my wife who offers massage and torture at the same time. Lucky for her, there are enough deranged people in the world who want that type of massage.
So Ate Guy is always in demand. She can massage five clients a day and she usually does. Because of this, she earns P50,000 a month.
But let’s say she takes a vacation. Her earnings drop to zero. And when she gets older, let’s say she doesn’t want to work this hard anymore. Instead of five clients a day, she wants to massage only two people a day. But if she does that, her income will go down a lot. Or what if Ate Guy wants to earn P100,000 a month? She can’t massage 10 people a day. Sure, she can raise her prices, but by only so much. My point? Active income is limited.
The only way to earn more is by switching to passive income. And the only way to do that is by duplicating herself. First, she can train other women the “Ate Guy Torture Therapy” and form an army of Ate Guy-Trained Torture Therapists—and earn a commission from each of them.
Second, she can create the “Ate Guy Healing Oil” in a bottle, ask other masseuses to sell them. I repeat: Active income has a limit. But passive income is virtually limitless.
2. Passive Income
Do you want to prosper? You need to create passive income. Passive income is the secret of the wealthy. In active income, you exchange your time for money. In passive income, you still exchange time for money. But you’re no longer exchanging your time—but the time of your duplicate. You exchange your duplicate’s time for money. You can stop working and money still flows into your life.
How to create passive income? There’s really only one way to do it: You have to duplicate yourself. And the best way of duplicating is..
Form Teams
You Form Teams
There’s a Chinese proverb that says:
If you want one year of prosperity, grow seeds.
If you want ten years of prosperity, grow trees.
If you want a lifetime of prosperity, grow people.
When you form a team around you, you prosper.
My friend PJ works as an IT professional. Last year, he decided to start a sideline. He started selling pre-selling condos. That was like taking a second job. So that was still active income. But soon after, he hired six of his friends to sell for him. If they make a sale, he earns a commission. When PJ did that, he crossed the line from active income to passive income. The moment you form a team around you, you switch to passive income.
Sell Things Through Teams
If you’re selling products by yourself, that’s still active income. But if you sell through teams, you’ve moved to passive income.
Let me give you an example. When I was a kid, I liked going to this tiny bakery selling Spanish Bread. It was my favorite snack. Butter and sugar inside the soft roll. Yum. The bakery was really a hole in the wall. Very tiny. But every time I went there, there was this tricycle outside. And she would haul crates of the bread into a tricycle. What did this mean? She was delivering to 30 stores who were selling her Spanish Bread.
What was she doing? Duplication. If she sold the Spanish Bread all by herself, that was active income. The moment she asked other stores to sell for her, she crossed the line from active income to passive income. The result of duplication was astounding.
What was she doing? Duplication. If she sold the Spanish Bread all by herself, that was active income. The moment she asked other stores to sell for her, she crossed the line from active income to passive income. The result of duplication was astounding.
Four years later, I saw that little store become a four-story building. All built by Spanish Bread.
Duplicate Yourself to Duplicate
Your Income.
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