Passive Income
BudgetingGlossary term
Definition
Earnings that require minimal ongoing effort to maintain, such as rental income, dividend payments, interest, royalties, or income from automated online businesses. Building passive income streams is a common strategy for achieving financial independence.
Related terms
- Financial IndependenceThe state of having enough income from investments, savings, or passive sources to cover living expenses without needing to work for money. Often defined as having 25 times your annual expenses saved, based on the 4% withdrawal rule.
- Side HustleA job or income-generating activity performed in addition to a primary job. Common side hustles include freelancing, rideshare driving, tutoring, and selling goods online. Extra income can accelerate debt payoff or savings goals.
- DividendA portion of a company's earnings distributed to shareholders, typically paid quarterly. Dividends provide a steady income stream in addition to potential stock price appreciation.
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