Passive Income Creation – It’s Like Growing a New Lawn

This is a guest post from passiveincomefamily.com. I’ve been following this blog for a while now, and I really enjoy reading every new post. Feel free to check out to visit PFI’s website and subscribe to the RSS feed.

Are you one of those people who are curious about creating passive income, but are still unsure of the potential it can provide to you?  Springtime is right around the corner, so what better time to talk about how creating passive income is just like growing a new lawn.  That may seem like a strange comparison, but one that is very similar when you break down the steps.

About a year ago, I was one of those people who were curious about passive income creation.  I had always been fascinated reading about people making a career out of building this form of income without relying on a 9 to 5 job.  I finally decided to dive into it head first.  While I have been successful along the way, there are a few things I wish I had done differently during the last 12 months.  If I had the steps identified below in front of me last year – I would probably be a lot further along than I am today.  Hopefully some people can use these steps to build a successful passive income portfolio – or a healthy lawn!

1 – Prepare the Soil

Any good lawn care professional can tell you that the first step when growing in a new lawn is to prepare the soil.  Whether you decide to sod or seed your yard, you first must rake and cleanup the area where you want your grass to grow.  Whether you are using landscape designs to map out your yard or you use some wooden stakes to mark out your area – you have a plan in mind before starting.

The same can be said about creating passive income.  You must first prepare the soil or in this case your plan for passive income generation.  If you jump in head first without a solid plan or idea – you will wind up becoming frustrated and more than likely will give up.  Any successful startup company will have a business plan that they build and grow from.  If you are going to create passive income – you need to create a plan before starting.  While you may not need a professionally written business plan to start, it is important to write down your ideas and goals.  These goals will help to provide you direction and force you to stay focused.

2 – Plant Grass Seed vs. Sod

Once you have prepared the soil for planting, the next step in growing a new lawn is to plant the new grass seed.  You could also opt for a more expensive alternative and sod your yard.  While this is a viable option, you need to consider the cost of the sod which is always more expensive than seeding.  Another thing to keep in mind is that sod can be grown in a different soil at a sod farm than what you have in your yard.  This could make for a difficult transition.  On the other hand, sod is quicker to establish than seeding your yard so the choice is yours.

After you have documented your plan and goals for passive income generation, it is time to plant your new passive income stream.  You could opt for the cheaper route and plant your passive income seed instead of sod.  Planting passive income seeds could include writing online articles for sites like eHow, starting up a low-cost niche blog, or purchasing secure certificates of deposit that earn you guaranteed interest.  The opportunities for seeding your passive income are endless!

You could also look to purchase (or sod) your passive income streams instead of creating them on your own.  This is a viable option for passive income generation but one that is much more expensive and comes at a higher risk.  If you purchase a passive income stream and it takes to your soil, then great – you have saved a lot of time and are on your way to making money.  Some examples of purchasing your passive income streams include buying existing websites or blogs that are already earning ad revenue, lending out cash to borrowers through peer-to-peer lending, or purchasing dividend-producing stocks.  All of these options cost upfront money, but could produce passive income in the future.

3 – Water and Fertilize

After the seed has been planted or the sod has been laid in your yard, the hard part is over.  Anyone who has ever laid a piece of sod on a 90 degree day can tell you that it is not a lot of fun.  However, it is something that is very rewarding in the end.  The next step in growing your new lawn is to devote your time to growing in your seed or helping your sod to establish roots into the soil.  Either option requires dedication and some tender loving care.  You should routinely water your seedlings or sod and give them some nutrients (or fertilizers) to help them grow strong.

Once all of your passive income streams have been planted, it is time to take care of them and help them grow.  If you purchased a dividend-producing stock, then you need to setup a plan to reinvest your dividend payments back into the stock.  This helps your passive income stream to grow big and strong.  If you started a niche blog to generate passive income, then you need to constantly monitor and maintain your site at the beginning, until it can take off on its own.  I could go on and on but I think you get the picture!

4 – Plant More Grass Seed

Before your lawn becomes fully established, you may need to plant some new seed or lay another piece of sod in areas that don’t take.  Often times a weak seedling or piece of sod may not take to your soil.  You need to patch some areas after the rest of your lawn has grown in.  Planting additional grass seed could occur for years depending on the quality of your soil and the care you put into it.

Some of your passive income streams may also need to be replanted.  Don’t be surprised if some of them don’t take off like you expected.  Hopefully the passive income streams that don’t take off for you were seedlings that you didn’t spend a lot of money to create.  Regardless, either type of passive income stream has the potential to fail based on environmental factors outside of your control.  If you purchased a bank stock that produced a high dividend in boom economic times, that same stock may have completely cut that same dividend during bust times.  The point is that you need to identify these areas that need patching and create new passive income streams for your overall portfolio (or lawn).


5 – Ongoing Maintenance

A year or two has gone by now and your new lawn is thriving.  You have given it the proper care needed to grow strong and healthy.  There is very little manual effort involved at this point in growing the yard, as it is mostly self-sufficient.  Notice that I said – mostly?  Anyone who has a home with a lawn knows that there is always ongoing maintenance of the yard.  There is the weekly summer maintenance of cutting and watering.  Then there is the annual maintenance of your lawn that includes aeration and fertilizer applications.  The point is that even though you have spent your hard work and created a beautiful lawn, you still need to maintain it periodically – or at least hire someone to do it.

So you have built your passive income portfolio into a strong and healthy cash-producing machine.  While the hard work is over, you still need to monitor your passive income streams to ensure they are still viable and healthy forms of income.   This step may include reviewing the quarterly financial statements of your dividend producing stocks, following up on new advertisers for your niche blogs, or even rolling over an expired certificate of deposit into a new one.  The point here is that even though I use the term ‘passive’ – it can never be 100% passive.  Even if you hire someone to manage your passive income portfolio, you wouldn’t be protecting your assets if you didn’t follow up from time to time on your manager.

Final Thought

If you are like most people these days, you are probably discouraged about the economy.  Things are difficult out there and are expected to get worse.  Why sit there and let the economy and businesses dictate your financial future?  Creating passive income streams puts you in charge of your finances.  Provided you build healthy and strong streams of income, you will outlast any recession or difficult economic environment.  Let’s face it – we have droughts from time to time.  Remember that beautiful lawn you created?  If it is healthy and strong, it will bounce back from any drought.  It may look rough and rugged during the bad times but will come out of it in the end.

Are you ready to start growing your new passive income streams?

  • http://www.aspiretograce.com Su Prieta

    Hey great analogy! I am in the beginning stages of creating passive and alternative income sources. I also started a new front lawn a couple of years ago. I remember how hard it was to get it started, but now, I can sit back and enjoy the view. Hopefully, my passive income path will be just as rewarding!

    Su Prieta´s last blog post..Rental Property Conversion Series: Refinancing Mortgage Loans

    • http://www.passivefamilyincome.com pfincome

      @Su Prieta, Thanks! Good luck with your passive income building.

  • Jeff

    Great post… pat would be proud :)
    I never truly have been able to utilize Step 4 (planting more grass seed) …and how sometimes things need ‘replanted’… you definitely brought some great insight. :)

    Jeff´s last blog post..Widgets, Tweets, and Xomblurbs

    • http://www.passivefamilyincome.com pfincome

      @Jeff, Thanks for the kind words. I have had several passive income streams fail on me already in my short career at it. The key is to keep going at it and let the strong ones survive – while replanting new ones!

  • http://www.corporatebarbarian.com Enrique S

    Comparing a lawn to growing passive income – how clever! I like your idea of multiple streams of income (CDs, blogging, dividend-producing stocks). I’m subscribed to your blog, also.

    Enrique S´s last blog post..A Foolproof File-Naming System

    • http://www.passivefamilyincome.com pfincome

      @Enrique S, I believe it is extremely important to diversify your passive income streams as well as any other income streams you may have that are not passive. Thanks for checking out PFI! I will hop over to your site and check it out.

  • http://makemoneyonline-guide.com Paul Morales

    Great comparison. I love the idea of multiple streams of income. I’m still working on it myself.

    • http://www.passivefamilyincome.com pfincome

      @Paul Morales, Thanks. Having multiple streams of income protects from things like the recession we are living through right now. The key is to build them as passive income streams so that you can work to replant new ones.

  • http://www.singlemomfreelancewriting.com Jennifer

    I never thought about it, but you are right. Build residual income is much like growing your lawn. I prefer to build my residual income with seeds. Thank you for sharing this with us.

    Jennifer´s last blog post..Bukisa Lowers Its Payout Level

    • http://www.passivefamilyincome.com pfincome

      @Jennifer, Using the seed method is my preferred option as well – not a lot of upfront capital but a lot of hard work.

  • http://lissowerbutts.com Passive Income – Lis

    Very nice post, I agree with it all but I like to mix up my lawn with a bit of decking and a rockery! Diversification of income streams affiliates, ebooks, adsense) and sources (more than website) is essential I think where none of us control utterly where google will rank our site in the search engine resultes! Lis

    Passive Income – Lis´s last blog post..Get Paid to Blog: Is it a Scam?

    • http://www.passivefamilyincome.com pfincome

      @Passive Income – Lis, Thanks for the kind words. Great point on Google. While a lot of people rely on Google for page ranks, focusing on it too much is not allowing you to be diversified.

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  • http://lifestylesoftheorganized.com/ Sarah H.

    Great analogy comparing your lawn to passive income!

    Sarah H.´s last blog post..Meal Plan Mondays: 2-23-09

    • http://www.passivefamilyincome.com pfincome

      @Sarah H., Thanks. I use to be in the golf course management field so I have a lot of past experience lawn maintenance. My latest passion is creating passive income so it seemed like a perfect comparison.

  • http://DivorcedDadFrugalDad.com DDFD at DivorcedDadFrugalDad.com

    Solid post!

    Using planting is a good analogy because people must realize that it doesn’t happen overnight. Instant gratification desires need to be shelved in efforts like building a business. It requires time, attention. and patience.

    DDFD at DivorcedDadFrugalDad.com´s last blog post..Spring is Coming: A Gardening Recap

    • http://www.passivefamilyincome.com pfincome

      @DDFD at DivorcedDadFrugalDad.com, Thank you. You are absolutely right! Passive income does not happen overnight and it takes a lot of time and hard work – just like growing in a new lawn.

  • http://www.amirrimer.com Amir Rimer

    I am using this analogy all the time. Creating passive income is just like growing a new lawn.

    Thanks for the amazing post, and good luck to you!