Time vs Money or Passive Income? Pros & Cons

Peter H.
5 min readSep 16, 2021


Photo by Morgan Housel from Unsplash

This topic has been on my mind for a very long time.

It’s about deciding whether you should rather invest your time in passive income projects or trade time for money.

So which is which?

Time vs. Money:

In the Time vs. Money approach, you are effectively trading your time. A classic is the service. For example, you write a text for someone or create a website for them. For this service, the focus is on the time you have to spend on it. As soon as the order is completed and handed over to the customer, you receive your payment.

Passive income:

For most, this is no longer a new term anyway. It is about creating systems that allow you to earn passive income. An example would be the sale of an online course. You create it once, upload it to a platform or advertise it on your own website. As soon as a sale of this online course has been achieved, the sales price is transferred to the account. Ideally, such a system is set up to automate this process as much as possible.

But what is the way to go?

In my opinion, there is not really a clear answer to this question. It depends on the personal goals of each individual.

In the following, however, I would like to describe my view of things on each of the two variants. I will share my personal opinion and list the advantages as well as the disadvantages.

Time vs. Money:


  • Fast money

If you choose this approach and accept a customer order, you can look forward to a certain amount of money after the order is completed. The faster the projects can be completed, the faster you will receive your money. The higher the order volume, the higher the total earnings. So, it makes sense especially for the people who need money quickly.

  • More possibilities

There are almost unlimited possibilities to make money with the Time vs. Money approach. If we compare these possibilities with the possibilities of passive income sources, it is clear that the Time vs. Money approach wins.


  • Opportunity Cost.

One of my favorite words. Especially when used in a business context. Once an order is accepted, you have to invest your time to process it. But in that time, you might as well be working on your passive income stream.

  • Scalability

A very big disadvantage from my point of view. It is clear that we have only 24 hours per day at our disposal. A normal, healthy person then also values enough sleep. Ideally 8 hours per day. This leaves us with only 16 hours. But can we really work 16 hours every day? Of course we could. But then we have a lot of other obligations that take up time accordingly. What I’m getting at is this:

We can only give a limited amount of our time. Even if we want to earn more, there is no way around additional time in the Time vs. Money model. We would therefore have to hire more employees. Now this can also be seen as an advantage. Personally, from a solopreneur’s point of view, I am probably a bit biased here and therefore put this point under disadvantages.

Another lever that could be used would be to increase the hourly rate. This is also only possible to a limited extent in most cases and also depends very much on the industry in which you work.

Summary Time vs. Money:

A very wide range of possibilities is available with this approach. If you are looking for quick money, this approach is probably the ideal one for you — at least in the short term.

You could just as easily put the time you spend each day processing client orders into a passive source of income. Plus, the income potential of the time vs. money approach can only be leveraged through employees or the hourly rate.

Passive Income:


  • It’s (mostly) passive

Arguably the biggest advantage to this model. Once set up, this channel throws off income to a large extent passively. Similar to dividend payments of a company. Of course, every now and then you have to put in extra work after the system is set up. For example, technical problems alone can mean that you have to put in extra work, so it’s no longer 100% passive. Hence the “mostly” before the “passive”.

  • Scalability

With the Time vs. Money approach, I see it as a disadvantage. However, with Passive Income, I see it as a strong advantage. Let’s say we decide to distribute an online course. Now what does the cost look like for us when one customer buys vs. when 100 customers buy?

Exactly, it remains by and large the same, as long as you have made appropriate automations. So the scaling potential is clear from my point of view. You don’t need a tremendous amount of additional time, if any, to scale a passive system. This would also be the case with subscription-based software. We can essentially not care if we have one subscriber or 500. They all get the same product, which we’ve already developed up front and whose reproduction is automatic.


  • Slow

To date, I don’t know of any passive income system that can be implemented within a few months, let alone weeks, and is lucrative. It just takes a bit of time. During this time, an extreme amount of work is usually necessary. Of course, there are certain models that require less work than others. In general, however, I believe that any passive income system takes a corresponding amount of time to become profitable.

  • Complexity

Now this doesn’t apply to everyone by any stretch of the imagination. But many people trying to build a passive income sometimes struggle with implementation. Especially when it comes to automation, some find it more difficult than others. For this reason, many already turn away from the idea and the implementation at a very early stage of development. This is a pity, because it automatically leads back to the time vs. money approach.

Summary of passive income:

The great advantage of the passive income model lies in its value creation. This is namely, hence the name, largely generated passively. The scalability of passive income models is also a significant advantage. The possibility of scaling is usually automatically included in the passive income system.

However, a negative aspect of passive income systems is their speed. In most cases, it can take several weeks, and often months, to see the first results. Also, implementing a passive income system presents certain difficulties for some.

Final words:

I personally started with the service (Time vs. Money) and still have an active client base. However, over the years this has become less than more. The decisive reason was myself. For me and my person, building passive income streams definitely takes precedence over the Time vs. Money approach. The advantages simply outweigh the disadvantages. For the most part, I don’t take on new jobs anymore. That would have to be something where I have a lot of interest and there would be some learnings for me in the process. Otherwise, I’m always in the mindset that the opportunity cost of the time vs. money approach is just too high. In time I could work on that or the other passive income model.



Peter H.

Digital Business enthusiast, Teacher for Data-driven Marketing, E-Commerce-Agency founder, Life Long Learner.