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 Have you dreamed of making money while you sleep? Did you even know that this is a possibility? The concept is called passive income and it plays a major role in obtaining financial freedom and wealth creation. This post is a brief introduction to some of the passive income sources I have started as well as some other ideas that you can do to create your own passive income streams.

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In the last post, we looked at 2 ways you can increase the value of your personal tax refund. Firstly, we looked at how you can save thousands of dollars in interest by using your refund to pay off debts. Secondly, we looked at how you can compound the amount of your refund by investing it in a wide variety of different vehicles. This post will cover the last 3 ways you can make more money by spending your refund.

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            The time has come once again. For some it is a time to get excited and ponder all the possibilities. For others, it’s a time to bite your nails, grind your teeth, and wonder how you will come up with money. If you are a good planner, business owner or just lucky; tax time can be a good opportunity to get some cash back into your pocket with your personal tax refund. For myself, I enjoyed several thousand dollars back. If you do find yourself with some extra cash back at tax time, you may be wondering what to do with it. It is actually possible to spend your personal tax refund and compound the effects to make more money.

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             Once you have calculated your personal net worth, you can now begin to look at ways to increase it. To recap, a net worth is your assets (what you own) minus your liabilities (what you owe). Think of it as

a financial compass. One of the keys to becoming financially successful is to increase your net worth over time at an accelerating pace. Here are 5 ways you can increase your personal net worth:

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            If you have completed your budget and found out that it does not balance, give your self a pat on the back. Not only do most people lack the knowledge or desire to balance a budget, they won’t even take the time to make a budget in the first place. If you have found out that you are spending more than you make, you have taken a big first step to correcting this problem. You cannot change what you do not know. If you would like to find out how to create a budget, you can read my previous post found here.

            To put it simply there are really only two ways that you can balance a budget. They are:

1.                  Make more.

2.                  Spend less.

You can find out if you are spending more than you make with the free budget spreadsheet found in the free “how to manage money” tool kit.

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            One of the first areas to look at when learning to manage your money is your personal net worth. This simple calculation will give you an idea of weather or not you are moving in the right direction. Think of it as a financial feedback mechanism. I would go so far as to say that this is the single most important piece of information you will need to know. If you just learn what this is and how to calculate it, you will be further ahead than most of the population. Lets look at how to calculate your personal net worth, as well as how you can get your free personal net worth calculator.

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           What comes first, the harvest or the planting? To any person this would be a rather stupid question. Obviously you will need to plant a seed before you can harvest it. Then why do most people have this concept in reverse when it comes to money management? Most people spend money before they make it, or they want to reap the benefits of a large harvest without planting any seeds. To put it bluntly, most people want to spend like the wealthy while working or investing like the poor. I’m not judging or comparing; I’m, just simply saying that if you want to spend like a wealthy person, you should probably make money like the wealthy person. Most wealthy people I have met or read about say they view money as potential or opportunity. Just like a farmer would see the oak tree instead of just an acorn, wealthy people see things like vacation homes and time with family instead of money. Wealthy people are farmers, planting and harvesting seeds of money. A healthy farm would allow you to quit your job.

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            What if I told you that one-cup of coffee a day could cost you your financial independence? Would you believe me? In the first part of this series we looked at the process called the rat race, and what it means to be broke. In his book: “The Automatic Millionaire”, David Bach talks about what he calls the “Latte Factor”. We will now look at what the latte factor is, what it means to you, and how you can benefit from the information.

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