How to Create Passive Income?

After I posted about Rich Dad, Poor Dad, I got a comment from John:

The idea of passive income is great… unfortunately, its not as easy to come by as is implied by the book.

The reality is you have to have money to make money. When you are living paycheck to paycheck, “Rich Dad, Poor Dad” doesn’t do you much good.

I left a reply in the comments section of that post, but I started to ramble on a bit, so I thought I’d share a bit about different ways that you can start to build a stream of passive income.

Use The Money You Already Have
If someone is living paycheck-to-paycheck, how can they start making passive income? The first option is to find additional money that you already have. We’ve all heard it before: let’s say that you spend $3 each weekday at Starbucks and $50 each weekend for dinner and drinks and whatever. That adds up to about $250 per month.

While $250 per month is not a staggering amount of money, it is a great starting point. If you put that money into a jar everyday for a month - rather than handing it over to billion-dollar corporations - you could quickly save up enough money to start making some small investments - stocks, mutual funds, CDs, home based business, etc.

Create More Money
If you absolutely have no extra expenses that can be cut from your budget, then start considering ways that you can generate more money. Look at any hobbies or skills that you have, and start to brainstorm about how you can turn those skills into a home-based business. Even if it only brings in a few bucks a month, you can slowly build it into a steady stream of income, and then use that money to start investing in your passive income stream.

If you’re fresh out of ideas for your home-based business, consider using The Law of Attraction to see what kind of ideas an opportunities you can pull into your life. I guarantee that if you start brainstorming and don’t give up after your first bad idea, you will soon arrive at something great.

Set Priorities
It could be that you really are broke, and even if you saved the extra money you would end up using that money to buy food and pay bills - then so be it. Your first step should be to clean up the basics in your life. Once you can pay your bills and feed your kids, then you can start looking to the future.

You Have to Start Somewhere
You might start a home-based business or buy a few stocks, then you make $10 one week and wonder how that will ever turn into anything substantial. The fact is that getting started is the hardest part. If you’re going to build an empire from nothing, it will likely take you several years - or more - before you start to see any real changes in your life. You have to invest in your education (you can go to the library for free) and you have to really want it. Creating a stream of passive income is not easy, but once you get that ball rolling down the hill, it continues to build on itself.