What’s the difference between Passive Income and a Side Hustle? Just looking at the names gives you a pretty good hint. Side hustles are all about activity. Passive income is about sustained flow with minimal intervention.
Side hustles are in the moment, usually finished quickly. Passive income is much longer term.
Examples for Comparison
An example of the difference between passive income and a side hustle is the difference between a yard sale and a consignment shop.
A side Hustle example would be having a yard sale.
There’s the prep of organizing everything you are going to sell: collecting it, cleaning it, pricing it, and arranging it for the day of the sale. Then there’s the sale itself where you are involved in being present while shoppers browse through your items, haggling over prices, answering questions, and collecting payments for purchases.
Yard sales are hands on all the time until they end; just like side hustles.
Passive income is more like selling in a consignment store. You find the items, deliver them to the store, and when they sell, you collect your consignment payment. None of the marketing or hands on administration of the sales process itself.
Income Flow Comparison
With a side hustle there is a quick income spike and then income drops back to the pre hustle level. The day the yard sale ends you have a cash box full of money.
For passive income, there is a more consistent level of income over a long period of time. The consignment shop sells an item every day or so. You get paid incrementally over time. By keeping the number of items you have in the consignment shop at a consistent level, you’ll realize a continuous rate of income.
Methods for Expanding Income Compared
How do you increase the amount of income in each example?
With a yard sale you have to have more yard sales. You have to acquire a large collection of items to sell, organize them, etc., etc. Eventually you run out of capacity on your own and hit an income ceiling or, you have to start hiring people to help. When you have to hire you add more work to the process and reduce your profit margins.
With the consignment shop example you simply increase the number of items you have in the shop. It is much simpler to build a system to purchase and deliver the items to sell than in the yard sale example. Once you have the process automated, your involvement shrinks to close to zero.
Compare and Contrast
Here are two books I’ve read on the topics of Side Hustles vs. Passive Income. Both are excellent guides on their respective topics. I recommend reading both and seeing which you feel the most connected to.
Side Hustle: From Idea to Income in 27 days
By Chris Guillebeau
By Tim Ferris
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NOTE: The links above are affiliate links. If you click on them and make a purchase I will receive a commission payment. That said, I only recommend things that I’ve used myself and think will be helpful to you.
