How To Do Basically Nothing And Earn Enough Money To Set You Up For Life

This isn’t an article about blogging on the side, or doing surveys for cash. We’re thinking big; the kind of set up that means you only need to work if you really want to. We asked The Cusp finance expert, Canna Campbell – Financial Advisor and founder of SugarMamma.TV – to give us a rundown of something every Millennial should know when it comes to getting your finances on point for the rest of your life: passive income.

While we can still absolutely love our day jobs, most of us, deep down, fantasise about the thought of not having to work – or at least only working because we choose to and not because we have to.

The idea of having a set amount of money paid to us on a regular basis that doesn’t actually require us to haul ourselves out of bed can’t help but evoke feelings of freedom, empowerment and choice, all of which seem pretty luxurious to me.

Despite what you may think, hear and read, the reality is that we are all capable of building a passive income for ourselves. Here’s how.

This almost sounds too good to be true. What exactly is passive income?

Passive income is defined as income received on a regular basis, with little or no effort required to earn it. Some examples of passive income include: a rental income, interest, oh and my favourite – dividends from shares (more on that below).

Lesson #1: You don’t need to be swimming in cash to have a passive income


One very important piece of advice that I often tell my clients is that you don’t have to earn a very high income to generate a passive income. Or as I like to say: it isn’t about how much you earn, but what you do with what you earn that counts.

Simply put, you have to make wise choices and be willing to research the economy and different types of investments.

And you may already be generating a small passive income without even realising it! The interest the bank pays you on your savings didn’t require you to exert any physical energy. Okay, so they may have only paid you a few cents or a couple of dollars, but this is a perfect example of what we refer to as ‘passive income’.

Lesson #2: You’ve got a magic number

If you want to build a substantial passive income, you need to be buying or investing in income-producing assets (ideally ones that provide capital growth, but we can talk about that another time).

Of course, the right blend of different investment assets will vary depending on your comfort levels around risk, experience with investing, and level of knowledge, but this type of shopping skill is completely within your reach.

Teaching people how to create passive income is actually what I am most passionate and enthusiastic about! To kick-start your excitement for this goal, I recommend firstly working out how much passive income you need to maintain your current lifestyle.

Add up all of your yearly expenses: rent, food, clothing, entertainment etc (and don’t forget to include those well-deserved holiday expenses).

Tally it up, then allow for income tax (how much tax you’ll fork over from your salary or wages), and the result is what I like to refer to as your ‘magic number’ to work towards.

Have a look at this example for a young client of mine:

Food – weekly groceries; takeaway: $5,000
Clothing: $4,000
Rent: $20,000
Car – petrol; insurance; maintenance: $3,000
Entertainment: $5,000
Medical – private health insurance; doctors: $3,000
Gifts: $1,000
Holidays: $10,000
Buffer: $2,000

Total – $48,000
Income Tax – $14,000 – including Medicare and rounded up
Magic Number ($48,000 + $14,000) = $62,000

This client of mine is now actively working towards building up an annual passive income of $62,000 so that she can quit her day job and has the financial independence and freedom to be able to work full time on a small business that she is passionate about. This will give her more fulfilment and joy, without having to worry about paying the bills or cutting back on her lifestyle. Imagine that.

Lesson #3: Get to work on investing


To achieve a financially independent life via passive income, we had to go through her budget to allow for a new type of expense – the purchase of long-term income-producing investments (like shares, property, bonds etc).

Over time, these will build up with compounding interest (when you earn interest on the money you deposit, as well as on the interest – so it’s like a double earning whammy) as well as continuous additional investments being purchased. Seriously exciting stuff happening as these investments allow her to generate additional income – even while she’s sleeping.

Like myself, this client prefers shares as the key asset to build her passive income. There are a few reasons why: the liquidity (how quickly you can get your hands on your cash if you need it); the accessible entry price; the low ongoing cost; and tax-effective dividend income that most Australian shares can provide.

Lesson #4: Start with a clean slate

While everyone can set about generating passive income for themselves, I like to recommend that you begin this process with a clean slate, so that you focus your entire energy on positively building wealth. This requires eliminating any form of debt as soon as possible.

So if you have any personal debt, (credit card, personal loans, car loans), make it your priority to pay this off first, so that you have laser beam concentration, motivation and determination to actively work towards your ‘magic number’.

Having clearly defined and meaningful goals, whether they be health and fitness-related or financial, help give us a greater sense of direction and stop us from drifting through another year remaining stagnant.

So call the Procrastination Police on yourself, crack down on your passive income goals and enjoy the sweet feeling of freedom and empowerment as you work towards a happier financial future for yourself – by doing barely anything at all.

Canna Campbell is a certified financial advisor running her own company, SASS Financial, established in 2007. Her blog and YouTube channel, SugarMamma.TV teaches people the power of financial freedom; covering everything from managing budgets and investing in stock and shares, to saving strategies for your ultimate designer handbag. Canna regularly appears on TV as a personal finance expert, and has written for many publications.