These days I see a lot of videos on YouTube talking about living our life fully with just passive income alone. This is easily said but hard to practice. Financial needs are something that can never be predicted but they can be planned to some extent so that we can live with just passive income alone. Before we go further, we have to understand what living with just passive income alone means.
Passive income is the income that is generated with the assets we hold or from the savings we have. In India, most of the people do a 9 to 6 job and retire at 60 and get a lump sum amount. This lump sum amount is then deposited in the bank in fixed deposits and they get an interest out of it every month that helps them make a living until they die. This is the ideal thing that happens for most of the salaried people in India.
Secondary income source as a passive income
Apart from the regular salary we get, it is very important to have one or more passive income sources. The passive income generation can start with a very low amount and gradually increase to a better value in years. For example, someone can start with a 50k deposit in the bank in FD that would generate close to 200 or 300 Rs per month. This money can help them pay their mobile bills every month.
If we talk to many passive income experts or people who have attained their financial freedom, they will tell us the same thing. We start with a small amount that is targeted towards covering the expense of our living and gradually increase it to the point where it covers almost all our expenses. The power of compounding also plays a very important role here and that would add up the funds in years to come and when we are in middle age, we should have enough money to spend on travels and enjoying life. Saving more than what we need without having any fun in spending is also not good. We have to also be sensible about our spending and make sure it is spent on the right things.
Art of not touching our salary
The secondary passive income should be in such a way that we shouldn't have any need to touch our salary for our spending. After a few years of working, we would have had the opportunity to save enough. The savings should be in such a way that the returns we get from the savings should be self-sustaining to cover the expenses and this way all the money we earn will go for additional investments. I heard this from one of the big investors where he reached his financial independence with these thoughts.
Every money pushing a good amount of money into savings or diversified investments is very important to achive this. Imagine our passive income from different sources increases and becomes more than our salary. If we are sure that we can live with the passive income alone, then we should also think about quitting the job and enjoying life. I have this thought in mind. When my passive income is two times my salary and if I'm happy about the amount I'm getting, I guess that is when I will quit my job and retire. This is my current mindset.
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