You may have heard of passive income. Are you familiar with passive income and how it is created?Passive income is sometimes also known as "mailbox money". Passive investing is another closely related term. The first step in creating your own passive income strategy is to decode the terminology and create a framework.

I want to clarify the facts about passive income. It isn't a myth. It's real. These are the most common reasons you want passive income.

•  To spend more time with your family, friends, and children.
•  To be able to innovate and execute in your primary career.
• To be able to pursue your passions.
• To be able to travel and live in a way that is geographically flexible.
• To be able to handle unexpected setbacks or financial difficulties.
• To be able to give back financially.
• To gain the financial resources to improve your lifestyle, categorically.

My passive income strategy has been a key pillar of my personal Investment Strategy in order to attain financial independence. I am a technology executive with two jobs. Passive income is income that comes in recurring installments and requires little effort. People prefer to receive monthly passive income as it is more likely to improve their quality of life.

Passive investing could be right for you if you fall into one of these categories:  You and your spouse work full-time jobs. You have children. You are short on time and you need to sleep. It's not surprising that after years of hard work, you have little extra income or time.

Nervous retiree: Are you approaching retirement age? You have saved throughout your career and life, but you realize that there is more you could do to prepare. You are now anxious about how to make your nest egg last the next 10-30 decades.

 Career rock star: You are focused on your job and don't get why people tell you to contribute to the company 401(k). The fact that cash is being deposited into an account you won't be able to touch for 30 years is something you struggle with. It is hard to believe that there is a better way to invest your capital than a high-yield savings or index account.

Active versus Passive Income

This is a spectrum. On one side, you have actively invested time and effort. On the other, you have completely passive investments. Active income is when you trade your time and effort for money. Income stops flowing if you don't invest your time and effort. Take this example:

• W-2 work or your "day job" is the way most Americans earn their primary income.
•  Fix-and-flip Real Estate Investing. This strategy is one of the most active in real estate investing.
• Consultancy or 1099 contractor work.
• Rent property investing, where you purchase a property and become the landlord.
• Entrepreneurship, or the building of a business. This type of income is the most active, as it requires the owner to be available 24/7.
• Passive income is income that comes without any investment of effort or time over the lifetime of the investment. Take, for example:
• Capital flow from investing as a limited partner in a commercial real-estate syndication.
• Distributions from private loans
• Ad revenue from digital and shareable content you have created.
• Profits from selling online something you have created, such a book or product.
• Renting property investment in which you purchase a property and hire a manager. This can be described as semi-passive income because it requires a small investment of time and effort.

To Buy or Build It?

You might have noticed a common theme. There are many ways to generate passive income streams, but you can only group them into two strategies: build or buy. Passive investing is where you take your money and buy a monthly passive income stream. You can also use your creativity, connections, resources, and hard work to make a monthly passive income stream. If you're a career professional looking to generate passive income, the strategy to build rather than buy is best. You have limited time, but there are ways you can save capital for passive investment.

Why is passive income important?

Passive income can be taken now and reinvested to generate more income streams. This strategy has a "snowball effect" on investors. If you have multiple passive income streams, your expenses can be covered. Real estate income is also less taxed than W-2 income. You may only be earning 60 cents per dollar as a high-income worker in a W-2 position. Would you prefer to keep 100% of every dollar you earn? Combining the power of goal setting and measurement of passive income monthly creates a roadmap to financial freedom. There are many resources available to help you find reliable partners, vet them and create income streams. It is important to start by learning about yourself.