How to Turn Active Income into Passive Income

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So many of us physicians never make the transition from having active to passive income. Mostly because we’ve never been exposed to it or even thought about it. Well, I know I think about it quite a bit and I appreciate a physician who understands how to make this a reality.

This guest post comes from Sylvie Stacy, a preventive medicine physician who blogs about career fulfillment and lifestyle design for medical professionals at Look for Zebras. She has some great actionable tips that you can start implementing now. Enjoy!


Not every side hustle can be a passive source of income. In fact, most of them aren’t. Passive and active aren’t two discrete boxes into which each income source can be placed. Income generation is more like a spectrum. When it comes to side hustles, the most obtainable opportunities tend to fall toward the active side.

Telemedicine, freelance medical writing, selling health products, and the like are all means of earning active income, regardless of whether we do them alongside a 9-5 or whether we rely on the cash to pay our bills. They take time, drain our brain power, and demand critical thinking. Even passive sources of income, such as royalties, are only available to those who’ve put in the active work up front to create valuable copyrighted material.

Fortunately, there are steps you can take to shift your side hustle from active toward passive.

Consider Your Exit Strategy from the Get-Go

When you’re thinking about starting a new side hustle, take some time to ponder how and why you’ll stop doing it. This may seem like its dramatically jumping the gun. (It’s not.) Or it might seem like something that only a venture-backed Silicon Valley startup should be doing. But it can really benefit a lowly part-time physician endeavor, too.

If your side gig exit strategy is nothing more than to taper and discontinue as you lose interest or prioritize another obligation, chances are it will be active income all the way until you stop. But if you plan ahead for an exit, you’ll naturally increase the likelihood of your gig becoming passive.

Consider these approaches hustle-halting:

  • Establishing a licensing agreement
  • Passing the hustle along to a family member
  • Posting your online business to a marketplace for sale
  • Selling the rights to your intellectual property

All of these options require that, at some point, the hustle no longer depends on your own time and actions in order to generate income.

Avoid Trading Your Time for Money

Work that results in you being paid by the hour means that all income generated is active. We can’t increase the number of hours in the day. And most of us have the mental capacity to only dedicate a certain amount of time to a side hustle – especially when we’re trying to balance it will a full-time job.

There are a couple of ways to get around this and make the income at least slightly more passive. First, charge for contracted work on a “per project” or flat fee basis rather than an hourly rate. Another approach is to develop some sort of package or bundled service that you offer. As an example, this could take the form of a written report to go along with consulting work.

MLG real estate investingAutomate, Delegate, and Eliminate

When taking on a side hustle as supplemental income, most of us are tempted to do it with as little out of pocket expense as possible. It’s a hustle, after all. However, spending money to automate, delegate, and eliminate activities will make your income increasingly more passive.

As you go about your income-generating pursuit, pay attention to whether the “passivity” component has plateaued. Then determine why. If you’re spending time on tasks that could be completed with software or another tool, consider implementing that tool. Many minor challenges in the day-to-day work of your gig could potentially be delegated to an assistant or a sub-contractor. You might also find yourself wasting time on activities that don’t actually add value to what you offer and don’t increase your returns. These can be eliminated entirely.

As a bonus, doing this will afford you the time to consider how you can generate even more income. This will make up for the extra money you’ve spent on automation and delegation.

Help Potential Clients or Customers Find You

Many physicians looking to make extra income end up tracking down one job after another, as a series of one-off paychecks. This can take many forms – freelance projects, expert network engagements, or taking online surveys, to name a few. Not only is the work itself active, it takes time to find and secure each job.

Having clients and customers reach out to you is a huge step toward transitioning active income to passive income. You can facilitate this by marketing your service or product. Build a website and start a blog, buy ads in relevant publications, or ask past customers for referrals. There’s no need to get fancy – even a thoughtful and thorough LinkedIn page can be beneficial.

Don’t Make It All About You

Consider these small business names:

Joe Sixpack, MD Consulting

Jane Smith Medical Writing

These folks are probably generating active income. The individual is the business. They are the face of the business, and they are what comes to mind for customers who think of the business. This is precisely what some physicians want – and that’s fine! But this can make it difficult to turn your income into passive earnings.

There are a few ways to help prevent this (aside from selecting your business name carefully). Offer something more than just your expertise. Build a brand. Use repeatable, systematic approaches in your work.

Ask yourself, “Could someone else take over my side hustle right now and be successful?” The answer doesn’t need to be yes, by any means. Contemplating this question, though, can help you make changes and put processes into place that expedite earning income that is more passive.

Follow Your Passion

This tip may be an obvious and trite one, but it’s important. Do something that fires you up. The more passionate you are about your work, the more it will be reflected in your results. As you find yourself overloaded with opportunity, you’ll have no choice but to streamline practices, hire help, or find other ways of turning some of the active components of your income into activities that don’t rely on your time or energy.

To make a broad generalization about the points above, think about your side hustle as a true business. You’ll be more likely to push the needle toward the ‘passive’ side of the active-passive income spectrum.


4 COMMENTS

  1. Avoid trading your time for money is by far the most impactful and key statement.

    As physicians we already have a lot of demands on our time. Sure the money is great but it still puts a lot of pressure on us to maintain it by putting in the necessary hours.

    When I started developing passive income streams it was more of a freeing feeling. I knew this money did not depend on me showing up for work and in fact worked 24/7 365 days a year. Something I couldn’t possibly do.

  2. I’m sitting in my motorhome having just finished playing cards after a long day of exploring Yellowstone National Park. My passive income source was paying me all day long while I was hiking. Trading time for money can’t do that.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

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