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Welcome to Money Talk for Real, a podcast where I talk about making money, spending money, and everything in between. I am Nick, and in this episode, I want to talk about passive income. You see stuff online, people talking about passive income, having all these income streams, doing nothing and making money. And I want to talk about the truth about passive income because to be honest, in my opinion, it's mostly a lie. So let's talk about something that everyone wants. Everyone talks about, and honestly, almost nobody understands, in my opinion. And that is passive income. Because if you've been on the internet for more than about 10 minutes, you've probably been told something like, just build a passive income stream, bro. Just sit on a beach and money rolls in and life is good. And yeah, that sounds great, right? Don't we? Don't we all want money for doing nothing but have something? But here's the truth most of what people call, quote, passive income is not passive. And it's definitely not easy. So in this episode, I want to break down what passive income actually is, why most people are chasing it the wrong way, and what you should be doing instead. So let's get into it. Let's start here. When most people hear the term passive income, they picture that, you know, money just hits their accuracy, hits their bank account while they're doing nothing. And they just picture no work, no stress, no effort, basically, I mean, essentially just free money. And honestly, I get it. Uh, who doesn't want that, right? I think everyone would, but the problem is that version of passive income is mostly a fantasy because what you're usually being sold is the kind of mindset of like, just do this one thing and then you never have to work again. And that's where people get stuck. It's crap. It's BS because they're not chasing income, they're chasing escape. They don't actually want passive income. They want to, you know, not hate their job, they want to not stress about bills, they want to feel in control of their time. Passive income just sounds like the shortcut to do those things, but shortcuts in money usually cost you the most, if I'm being honest. Here's the reality that no one wants to say, no one wants to talk about. There are a few types of passive income, and almost all of them require one of two things. Number one, a lot of money up front, or number two, a lot of work up front. There's generally no third option. So let's talk about option one. You invest money, and that is you know, that requir requires a lot of money up front. If you invest the money, you're typically doing it in either like rental properties or dividend stocks or investing in businesses that you don't run. And yeah, that's passive-ish, I guess. But guess what? You need money first. You need a lot of money first. And most people chasing passive income simply don't have that kind of money yet. So then you look at option two is you build something that is quote passive. You build a YouTube channel, you build a digital product, you build an online business, whether it's content, courses, something like that. People call this passive because they they sell it as, oh, I can make money while I sleep. And they they call it as passive, but it's not passive, really, at all. That it's just front-loaded work. And what that usually looks like are a lot of late nights, um, a lot of kind of zero results in the beginning, zero results at first, and frankly, months and months or even years of effort before anything ever pays off. So when someone says they make passive income online, what they're telling you is I worked like crazy for a long time with no guarantee. But, you know, that part isn't the part that goes viral, isn't sexy. What people see is they make money while they sleep. They don't see all the crap that went, you know, the unpaid work that went into it in the beginning. And people do fail at this, and this is where people get stuck. They try to jump straight into the passive income before they've even built an active income. That's like trying to buy rental properties when you can't even save a thousand dollars. There is an active part of this before the passive part, or you're trying to build five income streams when you haven't even made your first dollar outside of your day job. So what happens? They they bounce around, they try drop shipping one week, they'll try YouTube the next week, they'll try affiliate marketing the week after that. They're always chasing something. It's almost like the shiny object syndrome, but they're never actually building something. They want to get rich quick. I'm guilty of this. I've tried a lot of things in my life because I get impatient and I'm like everyone else. If it's not making me money quickly, I'm out. And that's not the way to build something legitimate that can eventually turn into passive income. Again, they're always chasing, they're not building because passive income is not built on ideas, it's built on consistency. And most people quit before anything has time to work. And again, I'm not judging. I am guilty of this. You have got to nurture it, you have got to give it time. You're not going to start a business and turn a profit in day one, most of the time. And here's another big one. People underestimate how long it actually does take. They think to themselves, well, I'll start this and in three months I'll be making money. And again, admittedly, I thought in 90 days, or which is three months, 30 days, whatever it is, I'll be making money. But the reality is probably more like, okay, six to 12 months of nothing. And then you might get a few small wins. And then maybe it starts compounding. But by then, most people are gone. Their patience has got the best of them, they get discouraged, they they're not seeing results. Most humans are results-driven mindset people. And by the time you actually can see the results, again, you might be a year into this thing before even just a small win happens. And by then you're gone. So try changing your mindset. How about instead of chasing the passive income, shift the mindset to stop asking, okay, how do I make money passively? And start asking, how do I build something that can eventually pay me without my time? And that is different because now you're focused on building an asset, not chasing a shortcut. You're not chasing a get rich quick scheme. An example of an asset, again, could be a YouTube channel. It could be a brand that you build. Brands do not become big overnight, they take time, effort. They they have to be built. It could be a business, it could be a product, it could just be a skill that you have that you build that pays. And here's the key. At first, again, none of it is going to be passive. It's very active, big time active. But over time, it can become semi-passive, it can become leveraged, it can become scalable. That's the real goal. Not passive, but leveraged. So, and what that means is where your effort today, the unpaid effort you're putting in today, can pay you again later. Let me give you an example here. Let's say that someone says, I want passive income. I'm thinking about starting a YouTube channel. That's great. Especially in today's world, digital, in my opinion, is one of the best ways to go. Either digital or blue collar. The stuff that we all, and this is a tangent, kind of a rabbit hole, but the stuff that we all, at least my generation, went to college for, the middle of those two would be things like graphic design, marketing, writing, budgeting, you know, finance. A lot of those things are being replaced by AI. And it's unfortunate, but that's the truth. So blue collar, something that you can do with your hands, that would be building the skill, or something digitally, whether like a YouTube channel, an asset. So, anyways, the example is someone wants to build passive income. They're thinking about starting a YouTube channel. Again, cool, that's great. But here's what that actually looks like. That looks like building or creating the first 20 to 30 videos with zero views or hardly any views, close to zero. And then you have to learn the editing, you have to learn the titles, you have to learn the thumbnails. You're figuring it out what works. You don't know what works. If you've never had a YouTube channel before, you don't know what's going to work. And there's going to be no money coming in because no one knows who you are. You haven't built anything yet. And that's where most people quit. 20 to 30 videos of filming all those videos, scripting all those videos, coming up with ideas for all those videos, editing, doing titles, doing thumbnails, that is a lot of work, and there's nothing coming in. So what happens? You quit because humans don't want to waste their time. But the person that does keep going, if you can, eventually, and there's no timeline on this, you don't know how long it's going to be. Eventually, your videos start getting a little bit of traction. Maybe the ad revenue from Google, from YouTube starts to kick in. Maybe they start selling something, whatever it is that people want from their videos. Now it starts to look passive to the average person, but it wasn't. It was delayed. There was a long time there, again, 20 to 30 videos where they weren't making anything. So it was not passive, but it looks that way now. So that's what passive income actually is. It's delayed payment for work that you already did. So let's talk about what you should do instead. If you're listening to this and you're thinking, okay, so what do I actually do, Nick? Tell me. Here's a simple plan. And it is a little generic because everyone's skill set's different, everyone's passion is going to be different. But number one, focus on increasing your active income first. A better job. Do you know, do a better job, do a side hustle, build some skills. You need cash flow. You need, you need, you know, cold hard cash. You need money. And then number two, learn to keep money. I've talked about this on almost every episode. Budget. It doesn't have to be perfect, but it needs to be simple. Budget. Keep your money. Cut out the obvious waste. Build the cushion, build the margin, build the gap. Live on less than you make. Do not spend every dime that comes in. And then build something scalable. It can be content in the form of a YouTube video, a podcast like I'm doing, a social media channel, whatever it is, content. You can build a product that's scalable. You can build a small business. Pick one thing, though. Don't try to do five things. Don't get the shiny object syndrome. Again, the example of drop shipping, then YouTube, then podcast, then you know, pick one thing. And be consistent longer than most people. Most people are not consistent if they don't see the money. Be consistent. That's the whole game. Because the truth is passive income really isn't a hack. It's not a secret. It's just the result, the effect of doing the work that most people would avoid for longer than they're willing to do it. So, yeah, the the truth about passive income is that it's not passive. It's just delayed. And if you can understand that, you're ahead of most people and you do, I guess, have a shot at passive income. If you got value from this, share it with someone who's chasing that easy money idea so that they can understand that there is no easy money idea. I want them to hear the truth. Leave this podcast a five star review on whatever platform you're listening it on. If you have any questions, you can reach out to me at money talkforreal.com. Thank you so much for listening, and I'll catch you on the next episode. This is Money Talk for Real.