Failing to generate passive income is a potential financial pitfall. How so?
◾ Sole dependency on active income
Relying only on active income can be risky.
If you’re unable to work due to illness, job loss, or other unforeseen circumstances, your income stream may suddenly cease, leading to financial stress.
◾ Limited time and scalability
Active income is typically limited by time and effort.
There are only so many hours in a day, and your ability to increase your earnings may be constrained by the number of hours you can work or the capacity of your business.
Passive income, on the other hand, allows you to generate money with less ongoing effort and can be more scalable.
◾ Minimal diversification and risk management
Passive income sources can provide diversification and help spread risk across different assets and investments.
Relying solely on active income from one source, such as employment, exposes you to concentration risk.
If that income source is affected by economic downturns, industry changes, or other factors, your financial stability could be at risk.
