Passive income isn’t for everyone. Some people can’t spend significant time trying to earn an income that will never come. Let’s evaluate some of the disadvantages of passive income to understand if it’s the right way to live for you. 

Why Passive Income Isn’t (Always) The Best Way To Live

Passive income earners seem to be coming out of the woodwork these days. They’re the bloggers who spend their days traveling through exotic places, take breathtaking pictures, and making a living from a popular blog or e-book.

They may also be the neighbor who made smart investments in the markets a long time ago and are now retired and (presumably) sit around counting their money and complain about yard work.

I admit I get a ping of jealousy when I see these types. And that’s when the wheels in my head begin to turn. What’s stopping me from taking that path?

While their lives might seem envious, the saying “Be careful what you wish for” is true for a reason. When I sat and thought it out, I realized that there are a number of unexpected costs, obstacles, and hidden requirements that may not make relying on passive income the best way to live.

I created a book titled Dividend Investing Your Way to Financial Freedom to help you increase your income and build wealth at the same time.

If you want a sample of the book, you can download it here.

Click here to download

Combining both dividend investing and real estate can be a great way to invest your money. Both can give you passive income and a residual capital benefit.

Here are several other tips on how to invest money to allocate your assets.

What is Passive Income

Passive income is a type of income you get on a regular basis that requires little effort. Some examples of passive income include earnings from:

• Monetized blogs (start a blog with Bluehost for as little as $3.95/month)
• Affiliate programs
• Royalties
• Rental income (rent out your place on Airbnb and earn income that goes straight to debt or investments)
• Flipping items
• Investing (see what it takes to live off dividends forever with our dividend calculator)
• Cryptocurrency

We live at a time where the gig-economy has made making money as easy as taking pictures of your spare bedroom and renting it out to travelers. Affiliate marketing has made it possible to make a living from your Instagram.

Platforms like YouTube have even allowed people to monetize their makeup tutorials and hobbies.

With all of these changes in how and where people work, it’s easy to see why people like me dream about quitting our day jobs and instead live off passive income sources.

With so many alternative ways to bring home the bacon, heading into an office for 40 hours a week seems moronic.

Here are the identified forms of passive income from Millionaire Mob:

• Airbnb: $500-$2,000 per month
• Dividend income portfolio with Robinhood (get free stock when you use my link): $100-$150 per month
• Shutterstock: Sales of stock photos ~$50 per month
• Peer-to-peer lending with Lending Club (get $50 free using my link): $35-$50 per month
• Real estate crowdfunding with CrowdStreet: To-be-determined

These are all part of the 10-year plan to increase income and build wealth as fast as possible.

Cons of Passive Income

I’m sure you have seen a number of topics saying: there’s no such thing as passive income or passive income is a bad way to earn additional income or even that passive income is fake!

For me, I think it’s safe to say that passive income is very much real. However, there are definitely disadvantages to consider. Here are some of the disadvantages of passive income sources.

1. Passive Income Takes Diversity and Time

As idyllic as sitting around and doing little to earn money sounds, relying solely on passive income can be a risky way to earn a living.

For one, it’s always a bad idea to keep your eggs in just one basket. Many first-timers assume that they only need one stream of passive income. However, it takes several streams to sustain a comfortable lifestyle. And managing a number of streams can become chaotic and complicated.

When I first began a career blogging, I was overwhelmed with the amount of work I needed to put in from the get-go.

Learning what makes a user-friendly site, studying best SEO practices, and even just writing the content on each page took days of research, trial, and error. It was a slow process, and I realized that I was going to need to keep working my 9 to 5 until I saw any sort of money appear.

And despite the idea that passive income should be accomplished without having to do any work, many incomes do not last forever.

For example, bloggers constantly need to rewrite content, develop new courses or e-books, and promote their sites in order to continue a steady income.

And investments may take a turn for the worst, requiring investors to keep an eye on how well their portfolio is doing.

Developing a course can take significant time to start earning realistic earnings. Here’s how to create an online course for a hobby.

2. Passive Income Can Be Isolating

Part of the reason I fell in love with my last 9 to 5 was the people I worked with. I’m a bit of a chatterbox, and I love getting to know everyone.

While it’s much easier to get my tasks done from the comfort and quiet of my own living room, not heading into an office every day, regularly working alongside others, or even having someone to make small chat to can make me a little stir crazy.

For those who have a tough time keeping themselves accountable, the passive income lifestyle could completely throw them off course.

For others, it’s a lifestyle that removes your opportunity to work with people who could bring you more work.

There are other ways to earn money now with it being so isolating.

3. The True Cost of Starting Passive Income

Passive incomes are never as straightforward as they seem. These opportunities often require thousands in startup money, an obstacle that’s cost-prohibitive for many people. And when you multiply this need for cash by the number of income gigs you have going, your ROI may disappear quicker than you can blink.

For example, many of my friends began purchasing passenger vehicles to rent to other Uber and Lyft drivers. This removed the need for them to head out in the early hours and drive all day – they simply took a cut of the profits their contractors made.

However, to start this sort of business, I would still need the cash to buy a second car. And if that car breaks down, I would need money saved to help make repairs, pay for registration, and cover insurance.

Without an initial chunk of change, this seemingly foolproof plan could fall apart in days. Or, if you are selling on eBay or even looking for scrap metal.

Your time adds up and you might not be sure everything will go accordingly to plan.

4. Alternatives to Passive Income

The idea of spending the next 30 years of my life in debt working a 40-hour office position frightens me. And with so many alternative ways to make money, it seems foolish to stick to such a traditional path.

Yet I’m still hesitant to jump right into the passive income wave.

Although laying back and letting my money work for me is a dream come true for many, I prefer to stay a bit more hands-on with my funds.

Lucky, there are plenty of ways to make a quick $500 whenever I feel moved to work.

Freelancing, taking surveys, driving for a rideshare company, even charging Bird scooters are all fun, flexible ways to make some money on the side.

And, of course, there’s working part-time. Maintaining a regular job that requires some effort can provide you with some unbeatable benefits, including job security, a sense of stability, a structured schedule, and a steady source of income not based on the gambling of investments.

You can try using some of the best freelance websites to start earning side hustle income.

The only problem with that is that y0u substitute your time. Here are 23+ online jobs to consider.

Conclusion on Deciding if Passive Income is For You

When it comes to passive income, remember Easy come, easy go. If full-time and part-time work really isn’t your jam, make sure you’ve figured out how you can sustain a passive income lifestyle and saved up a couple of months of salary before departing your job (and remember to do so on good terms).

Here are other proven ways to make money for doing nothing.

If nothing else, your time in the full-time, 9 to 5 workforce will provide you with a firm and unsettling motivation to innovate your way into a sustainable passive income lifestyle.

What are your opinions on some of the cons of passive income? Please let us know in the comments below.

Lexi Carr is a freelance writer with a passion for research, saving money, and helping others. When she’s not obsessively reading financial advice blogs, you can find her binging a mini-series or drafting an article. 

Other Passive Income Resources:

• Use these cashback apps to earn income for routine purchases
• How to flip phones for profit and start earning side hustle income
• Tips for investing in wine to earn income
• How to sell Amazon gift cards for cash

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Cons of Passive Income