The millennial generation gets a bad rap when it comes to the topic of financial responsibility. But is that stereotype true? Or do millennials simply prioritize life and finances a little differently than other generations?
The young workforce of today isn’t working to retire. They don’t think of retirement as a phase of their life nor do they plan to work to afford it. Why wait until 70 years old to enjoy life? But this mentality isn’t necessarily irresponsible when it comes to money and finances. It is just different. Working and saving to achieve financial freedom and flexibility to live a life full of travel and pleasure is becoming the new normal, and the idea is growing as millennials dominate the workforce.
So, just how can the millennials achieve financial freedom so that they are free to live the life they want? According to Diego Corzo, 27-year-old entrepreneur and real estate guru, the answer lies in creating passive income streams.
What is passive income?
Making money while you sleep. Sounds like a dream come true, right? The simplest definition of passive income is that you are able to earn income without being actively involved or at least minimally involved.
After reading the book “Rich Dad Poor Dad” at the age of 21, Corzo became obsessed with the idea of passive income. Now that he has figured it out and successfully earns everything he needs passively, he has turned his attention to helping other millennials do the same thing.
Most of the time, when people need a little extra cash flow, they pursue a part-time job or side hustle. The vast majority of Americans trade their time for money. They get paid by the hour and barely earn enough to get by. But what if you didn’t have to? What if you could pay off your debt and even earn enough to live based off of passive income?
How to create passive income through house hacking
While there are several different ways to create passive income streams, house hacking is a very tangible and achievable method that millennials can use with little to no upfront money. House hacking simply means that your expenses are paid by other people. You own a house and live with roommates. Your roommates cover the mortgage and bills with their rent, leaving you with extra money to travel or buy the things you want -- the millennials’ dream come true.
Most people falsely believe you need 20 percent down to purchase a home, but it simply isn’t true. There are programs and grants available to get you into a starter home with very little money upfront. “I started with zero in the bank after I graduated from college at age 22," Corzo said. "By age 24, I bought my first home to house hack, and I have been living for free ever since. Two years later, I was able to quit my full-time job and now I own eight properties.”
House hacking is just the beginning
House hacking, as explained above, is a strategy that can help millennials achieve financial freedom and create a passive income stream, but that is just the start. House hacking is one of the least expensive ways to get started in real estate and create a truly different lifestyle.
“A lot of people don’t pull the trigger to start investing in real estate because they get overwhelmed with the unknown," Corzo said. "House hacking allows you to get your feet wet because you are buying a property for yourself that just happens to have extra rooms that make you money.”
House hacking drastically decreases your living expenses, allowing you to keep or spend more of your money each month. In a world where the average American spends 30 percent of their income on housing, you could have that 30 percent to spend on creating a lifestyle you love or saving to invest in more passive income streams.
Corzo suggests giving real estate a try by starting with house hacking. If you don’t like it, sell the house or manage just that one property. But if you catch the bug and see the magic of passive income, keep investing. With Diego’s eight properties, he now creates $4-5k per month in passive income which covers all of his living expenses -- making him completely financially free.
Financial freedom is within reach
Even if you are heavily in debt as a millennial graduating from college, you can become financially free. The key that Corzo and many other millennials have uncovered is that you must make your money work for you. Stop trading your time for money and get creative with how you think. Of course becoming financially free also includes improving your credit scores, getting the best loans and creating personal budgets, but it also includes creating passive income streams. While this isn’t a get rich quick scheme, it has the power to change your life. Give it a try, and create the billion-dollar lifestyle millennials dream of.
Copyright © 2017 Entrepreneur Media, Inc. All rights reserved.
This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors