From the author:
What does financial security mean?
I do not even want to start by defining the term "financial independence" or even setting absolute numbers. Surely you have your very own ideas of financial security.
No matter what you define as financial independence for you, it is wise to fundamentally reconsider the priority of money in your life. This helps to gain some mental independence from money and face financial fears with a different look.
Overview of income and expenses
In addition, you should definitely have a concrete overview of your inputs and expenses. These are two adjusting screws, which certainly give you some leeway. Let's look at both sides, starting with income.
Your goal should be to earn as a self-employed a minimum income, which is subject to only minor fluctuations. You can only do this if you are broad-minded, ie not dependent on a few clients, readers or other influences (for example, Google, affiliate partners), but have as many different sources of revenue as possible.
In general, income can be divided into two categories:
- Active income from employment or self-employment.
- Passive income from your own Company, from interest, stock profits or rental income.
Earn a passive income
One motivation for digital self-employment is to make your income more independent of the place and time components. Unlike active income - that is, the exchange of time for money that we want to avoid as an online entrepreneur - money should flow into your account without your direct performance and physical presence.
That's what passive income is. You can achieve this by automating and outsourcing processes, which we discuss in detail in the third chapter. Although you will always have to invest work in your income, so it will never be passive to 100 percent, but you can automate this to a high degree.
Build your own business
Unlike passive income through trading in securities or real estate, dividends on digital business models are not as spectacular, but much less risky and more independent of external influences. If you do not want to speculate, but want to build a sustainable business, you need a business model that is well manageable and scalable.
For example, think of selling an information product such as an e-book or a well-automated on-line shop. The offer for this is created once and can then be delivered fully automated to any number of buyers at any time of the day.
There are no limits to the scaling up
I think you recognize the difference to active income, where you can not simply subtract your labor from the equation. In passive income, your earnings are not limited by your working hours, but theoretically unlimited.
The big drawbacks are the amount of time it takes to create an offer and the fluctuations your revenue can be exposed to. The latter point, you prevent by not limiting yourself from the beginning to a source of income, but distribute the risk to different sources of income.
Finance your own passion
I am thinking of the muse described by Tim Ferriss - a business model that pays your running costs and does not necessarily have to match your passion. You do not have to think so big at first.
I know a lot of people (including me) who earn a few thousand euros a month with small, informative websites that are monetarized through affiliate marketing or advertising, creating the financial freedom for their real passions.
Prepare mentally for it to be laborious and take a few months for your work to pay off. No matter which project you are considering for you, it is especially important that you begin today to take small steps away from "time versus money" work towards a passive income.
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