I was listening to a podcast last month, and the question came up of how much of your time is spent in “reactive mode” vs. “proactive mode.”
That really hit home since it’s something I’ve been wrestling with lately, and a challenge I believe all side hustlers are faced with.
I’ve found myself in “reactive” mode quite a bit, delivering work for clients, answering email, fulfilling other people’s demands on my time. And all that is totally fine, because it pays.
But it doesn’t “scale,” or at least it doesn’t scale easily.
And it’s left me without much leftover time to pursue “proactive” projects — like writing a new book, creating a course, or building a new website.
Examples of “Reactive” Tasks:
- Checking email
- Checking Facebook
- Checking Twitter
- Delivering client work
- Answering the phone
Examples of “Proactive” Tasks:
Active Income vs. Passive Income
Active income is the money you earn as a direct result of the work you put in.
Your day job is active income.
Freelancing is active income.
Coaching and consulting is active income.
No matter how you have it structured, whether you’re hourly or on salary, whether you’ve “productized” your service or not, you’re still trading hours for dollars. (Unless you have a team in place behind you to deliver the work.)
Passive income is the money you earn from assets you control.
Affiliate earnings are passive income.
Investment returns are passive income.
Book sales are passive income.
Passive income is naturally attractive because it doesn’t require your direct involvement — at the time of its earning — to get paid. To be sure, there is often a BIG upfront investment in time and/or dollars to build or acquire a passive-income-earning asset.
Active income activities are generally reactive, while passive income activities are generally proactive.
With Limited Time, What Should I Work On?
For side hustlers with limited time, how should we prioritize our projects? Should we focus solely on building active income streams, to ring the cash register immediately?
Or should we focus entirely on building passive income assets, relying on our day jobs in the meantime for active income to pay the bills?
The Case for Chasing Active Income
I think the answer will depend on everyone’s unique situation. If you need to see money coming in right away, an active income strategy is the way to go.
In fact, for most people starting out, a reactive/active-income approach is probably the fastest path to getting out of debt, building a financial cushion, and improving their balance sheets. Most active income side hustles don’t require a huge upfront monetary investment, and you can begin to see the returns right away.
For example, Harry Campbell explained he was earning his first ridesharing fares within a week of applying to be a driver.
I got an email a few weeks ago from another listener who said he made $300 in his first weekend of buying and selling on Craigslist.
It’s rewarding and empowering to begin earning those first dollars outside of your day job!
Plus, along The Hustler’s Path, active income often leads the way to passive income.
The Case for Chasing Passive Income
The trouble with a completely reactive or “active income” strategy is the hustle can never stop, or the income dries up. Eventually you’d like to have some of your money working for you, to give yourself a little breathing room.
So if you’ve already been side hustling for a while, or are in a strong enough position financially, then I think it makes sense to start chasing passive income. Or build a little “proactive” time into your allocated side hustle hours.
Finding a Balance
For a while, my time was probably split 25/75 between reactive/proactive or active-income/passive-income projects, but lately it’s probably been flipped the other way.
It’s a battle between getting paid now and — maybe — getting paid later. There’s definitely such thing as spending TOO much time on passive income strategies, because they may never pan out.
Like any “spec” work, work you do on speculation, there’s a chance you’ll never get paid — dropping your hourly rate for that project to a big fat $0.
(I’ve had my share of those!)
In some ways, it’s a chicken vs. the egg dilemma; it almost takes some level of passive income to free up your time to work on developing more. And if you don’t carve out any passive income time, you might never get it.
One way around it is to raise your rates to a level where you don’t need to be hustling up active income ALL the time.
I think 75/25 active/passive is a good split for beginning side hustlers, but I’m going to aim to nudge the scale to tip back toward the “proactive” or passive income side.
Of the 8 income streams I’m working on, half are relatively passive — it’s just a matter of growing them.
How much of your day is spent in reactive vs. proactive mode? How much of your side hustle time is spent chasing active income streams vs. passive income streams?
Let me know in the comments below!