3 Phases to Passive Income Streams

Streams of income

Growing up on the farm I saw first hand every year my grandpa and dad's passive income stream requiring work in raising 1000 acres of corn and beans. I didn't realize it at the time. All I realized was that dad would continue to make me work hard.

Work hard to help the family!

Gosh, I resented him at the time! I was only 10 and my friends were all getting to play, but I had to go out and work! Ugh!

I don't know how he put up with my complaining?

The hardest part of farming a crop, for me, was walking beans. Row after row of beans. It felt like it would never end. Plus it was so hot and the bugs would always fly into my face and bother me to no end.

Fast forward 30 years and ironically I relish those experiences. I learned a lot! I'd give anything to go back to those times and walk into the house for dinner and be completely covered in blown dirt. Those fields are what turned me from a boy into a young man, and helped me to learn how to produce something with my hands.

I remember when I was younger, and asked my dad, “Why do you want to be a farmer?

Well, Charlie, I like not having to do the same thing day after day. Farming lets me have variety in what I do. Plus I get to see at the end of the season what I've produced. I get to physically hold an ear or corn in my hand, and say the Lord and I have produced this. Not many people can say that from their jobs.

In working with my dad for the first 20 years of my life on the farm I got to see first hand a great example of hard work. This past week I was working on my much smaller version of my dad's farm. My garden. It got me thinking. Thinking of my dad, and watching him produce a corn and bean crop every year. My garden was the same concept. It produces a passive income for me each year. However, it required a lot of work.

In looking at my head-high sweet corn I felt really proud. I feel proud to have produced something with my hands, but it didn't come without work. No. I realized that there are really three phases to passive income streams. Here are the three phases of any type of passive income stream.

Phase One – “Planting the seed”

passive income reportMost people think that passive income involves only one step. They think that income generation only involves putting a seed in the ground and watching it grow for year upon years. However, this is only the first step. It ain't any more important than the other two phases. All phases require some work.

In my garden's case, planting the seed, this is where I prepared the ground. I tilled up all the weeds that were starting to come in from the winter thaw and wanting to take over the land. I had to till up the ground before I merely just put a seed in the ground and let it go. Once my ground was prepared, then I needed to do the work of actually planting.

Growing up on the farm, I remember planting season taking forever! It was hard planting 1000 acres of corn and beans. Plus, mother nature wasn't waiting for your schedule. She had her own agenda, and you better get the seed in the ground before it gets too hot, late, or wet.

How are your passive income streams any different? I invest in dividend stocks (I plant a seed) to produce for me a quarterly dividend, and the stock market is very similar to mother nature. It doesn't care if you purchasing it the peak or not. Aaron and I started ThreeThriftyGuys.com blog in 2010 and didn't make any money from it for more than 12 months. I started doing Airbnb in September last year and started out by having to take a lot of pictures, writing descriptions, preparing the house for guests, and changing the locks to electronic locks.

All of these are examples of planting passive income streams. In each instance, there is that initial plant.

Phase Two – “Maintenance”

In the heat of the summer maintenance on the farm didn't feel so fun. It was so hot and humid on the farm in June, but dad was unrelenting! Get out there boy, and walk the beans! Ha! Nah…he didn't say that, but it felt like maintenance was never ending.

This phase sure wasn't the fun part of producing a crop. As a kid I was always thinking…why do we need to spray weeds or cultivate? I thought all the work was done in the spring. Nope! I was wrong.

In watching my dad, I realized that passive income streams required additional maintenance. Maintenance to control the weeds and ensure an optimal crop. A crop that wasn't inhabited by weeds or other resource competition.

What resources are competing with your passive income streams that might choke them out? What are income stream maintenance actions? In mine, I have to clean up after my Airbnb guests stay with us. I have to send them communication about things to do in the area and check in to see if they need anything. Our blog requires a lot of continual work that includes adding new articles, updating content, making YouTube videos, and communicating with affiliates and sponsors.

A lot of times, these phases can feel mundane and repetitive, but they are required. If you don't do maintenance on your income streams, then slowly but surely they'll die away.

Phase Three – “The Harvest”

In late July, I'm going to enjoy the fruits of my three months labor. I'm going to pick my fresh sweet corn crop and eat some good home grown corn straight off the ear. In fall, on the farm, I enjoyed the harvest season most of all! That is where dad and I got to harvest our 1000 acres and watch the cash roll in! :) Ha!

Honestly though, who doesn't love harvest? Harvesting is where you get to see the final product of what you and the Lord have done. My hands actually produced something! If I planted 30,000 seeds per acre in my 1,000-acre fields, then that 30,000,000 seeds would produce 200,000 bushels of corn. At $4 per bushel, 30,000,000 seeds would produce $800,000 of income in just one year. Cha-ching!

What is your harvest? For me, my harvest is 3 pm the day after my Airbnb guest checks in, and Airbnb direct deposits those proceeds into my PayPal account. Or when my dividend check arrives in the mail two to three weeks after the end of the quarter. Or at the end of the month when Aaron and I total up the blog income. It is all the same no matter what your passive income stream may be.

The point is that you need to do some work at harvest too. If the farm just planted and maintained, and never harvested, then all his actions would be for nothing. The same is true in your income streams!

Conclusion – Action

So what are you going to do about it? What actions do you need to take in the next day, week, or month? Are you sitting on the sidelines to plant your seed? Do you have some maintenance you need to do, but don't want to?

I'd be interested in hearing your perspective on the different phases you see in making a side income? What correlations do you see in everyday life that relate? What side gigs are you delaying on starting, because you don't have enough gumption or willpower? Leave a comment below and let's start the dialog on creating a passive income stream for you!

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  1. I grew up in a city and we didn’t do much gardening except for a few tomato plants in our backyard, but I love the analogy. I love the idea of generating passive income but you have to realize that passive income streams take a lot of time and effort to set up before you start seeing the rewards. If it was as easy as everyone thinks, then everyone would be doing it by now.

    • Mike – you are so right! Often times when we are thinking about launching another passive income stream we don’t think about the time commitment!

  2. Hahaha, great metaphor. :) In many ways you have to plant seeds for good things in life.

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