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We’re frequently asked “How do you fund your travel life?” The short answer: hard work and planning. No, we didn’t win the lottery. No, we didn’t inherit. No, we don’t have a mysterious benefactor. Yes, we planned this trip for years. Yes, we live on a tight budget. Yes, we are constantly pursing different income stream ideas.
To break this down I’m going to review the two main types of income streams, their advantages and disadvantages and some options for both while on the road.
Active Income Stream
An active income stream, or earned income, is the income you make from trading your time for money. This would be the money you make at your 9-5 job whether its salary or hourly work. Basically any of your typical jobs including home based crafting businesses, fee per task jobs and activities that pay based on time/effort spent.
This is the type of income stream most of us are familiar with. The downside is that once you stop putting in the work, you stop making the money. It’s directly proportional to the amount of time and effort you spend working. To make more money you need to work longer hours or learn a new and more valuable skill so you can charge more for your time.
A benefit to earned income is you don’t need money to make active income. All you need is that precious, non-renewable resource, time. Done correctly, the active income you generate can be deployed into the other income streams. Unfortunately, in order to create multiple streams of active income requires you having multiple jobs.
You can create an active income stream on the road very easily these days. Some jobs allow for remote work like website design and computer programming. Other options would include virtual assistant, graphic design, freelance writing and the list goes on… The downside is you are still trading time for money but you are doing it at the location of your choosing. For more ideas on remote work, check out this great post by Camille Attel over at More Than a Wheelin’, Top Remote Jobs for RVers.
Passive Income Streams
A passive income stream is money from assets you have purchased or created. This is along the lines of rent, royalties, dividends etc. Most people think of passive income as an income stream that requires no time or energy. This is not exactly true, however, the income you earn is not proportional to the amount of time invested.
If you were to purchase a house and rent it out, the income generated will be considered passive. Royalties are another example as they are produced from assets you have created. These can be books, patents, internet content etc. While it can take a sizeable time investment to produce an item or product, you can continually generate income from owning it.
One down fall to a passive income stream is it usually takes time to start producing a sizeable income. This means you will put a lot of time and effort into your passive income vehicles at the beginning without seeing any pay off. But, over time, you will generate income with minimal further time investment.
A passive income stream has some major benefits over an active income stream. Passive income is generally recurring income. The income from this type of investment will continually flow in with minimal work required.
Some other options for creating a passive income stream would be dividend paying stocks, private company investments, and crowd funding platforms. These types of passive income require an upfront investment of money as opposed to time but can often provide a steady income stream quicker.
Passive income tends to be fairly stable which helps you budget properly and know how much income you can expect per month. Check out our latest blog posts for more ideas on different passive income streams.
- Book Publishing on Amazon
- Financial Freedom While You Sleep
- Creating Online Courses For Passive Profits
“How do you fund your travel life?”
Back to the initial question, we slaved in our engineering positions for several years with the goal of full time travel as our motivation. Setting aside money from our paychecks and sticking to a budget reflecting the monthly amount we would need on the road was the first step. Step two was investing in rental property, private lending, dividend paying stocks, and our online business.
By transitioning our active earnings to passive income streams we’ve been able to break away from the 9-5 grind. Now we focus our time and attention on building even more passive income streams. Currently our online business is still in it’s development phase and reflects an active style of income. However, we’re sowing the seeds with our time now to transition it into another passive stream in the future.