Earn Active Income For Wants, Use Passive Income For Needs

When you reach financial independence or retirement you may eventually experience a sense of emptiness. After years of hard work, aggressive saving, and smart investing, you might feel a letdown because the toughest financial challenges are behind you. Based on feedback from readers since 2009 and my own experience after leaving work in 2012, I’ve realized that having a purpose is essential for living a fulfilling life.

To find meaning after retirement or financial independence, staying active is key. While I’ve previously discussed balancing active and passive income in specific ratios, the true path to fulfillment might be even simpler:

Focus on generating active income to cover your discretionary wants while relying on passive income for your essential needs. This approach allows you to maintain purpose, continue safeguarding your financial future, and lead a more rewarding post-work life—a triple win!

Active Income for Wants, Passive Income for Needs

Life is a series of challenges. After overcoming one, you might find yourself wondering, “What’s next?”

For me, two pursuits have kept me focused since leaving my corporate job in 2012: writing on Financial Samurai and raising my children. These activities motivate me to exercise and build more passive income. Without them, I might have drifted into an unstructured life, perhaps going on a Las Vegas bender and never returning.

Despite the demands of parenthood, I’m constantly seeking new ways to stay engaged—especially now that both my children are in school full time. Their absence during the day has created a 40+-hour-a-week void, which has led me to find more purpose.

Identifying my wants and then making money to pay for them have been truly helpful in keeping busy. If you’re feeling a void, I suggest you do the same.

While it’s smart to use stock market returns to buy fun and practical items when times are good, spending “free money” doesn’t bring the same level of satisfaction that comes from achieving something through effort.

Here are some personal examples of wants that have motivated me to earn active income.

1) New Wardrobe

My athletic jackets are 4–5 years old, and it’s time for a replacement given I wear them daily. Instead of spending $120 on a new jacket, I initially spent $27 to fix the zipper. A year later, the zipper broke again, and the jacket became even more worn. What’s my solution?

Earn enough active income to fund a new one. While I don’t need a new jacket, I want one. To achieve this, I could teach private tennis lessons at $140 an hour at my local park. Along the way, I’ll meet new people and stay active. The more clothing items I desire, the more lessons I’ll give.

2) New Family Car

My current car is 10 years old on July 2025, but with only 59,000 miles. While it runs fine, I’m tempted by the technological and safety advancements in newer models. Safety first when it comes to driving around family. Replacing my 2015 Range Rover Sport with a 2025 model would cost approximately $120,000 out the door.

To follow my 1/10th Rule for Car Buying, I’d need to earn $1.2 million in gross income, minus current passive income—a big gap of about $900,000. This challenge could push me to pursue additional consulting, expand Financial Samurai partnerships, or find a full-time job.

Alternatively, I could stick with maintaining my current vehicle for $1,000–$3,000 annually or rethink my car preferences entirely. My current car should easily be able to go for another five years. Meanwhile, a well-equipped, all-wheel-drive Honda CR-V for $35,000 seems like a solid choice. Earning $50,000 in active income to align with my 1/10th Rule is far more achievable than trying to cover a $900,000 gap as a retiree!

By requiring yourself to earn money to cover your wants, you naturally question whether those wants are truly worth it. Now that I think of it, I have no desire to spend potentially between 2,000 – 4,000 hours to try and buy a new luxury car I don’t need. My time is way too valuable.

3) First-Class Roundtrip Tickets to Honolulu

At 47, I’ve embraced Economy Plus tickets for an added 30–50% premium over Economy, e.g., $750 versus $500. However, first-class tickets cost 3–4 times more than Economy, which seems like a waste since we all get to the same destination at the same time. Besides, First Class still serves rubber chicken meals and I’m not a heavy alcohol drinker.

If I decide to spend an extra $1,200 – $1,500 for first-class, I’ll fund it by generating active income. For instance, I might take on more one-on-one personal finance consulting sessions (average one a month) to cover discretionary wants like this. Helping individuals navigate their financial challenges is already fulfilling. Having this additional purpose for consulting might motivate me to meet demand and help more people.

Now I have to decide whether saving $1,500 for a five-hour flight by just sitting in Economy is easier than doing more consulting. Hmm, taking a nap in Economy for $300 an hour seems much easier.

Leave Your Passive Income Alone To Cover Your Needs

Tying your financial wants to active income not only keeps you engaged but also reinforces discipline in distinguishing between needs and wants. By challenging yourself, you can enjoy life’s luxuries guilt-free post-FIRE while preserving a strong financial foundation.

Unlike an adult child whose parents provide everything, you’ll feel a deep sense of pride and satisfaction knowing you earned your purchases—a feeling that’s priceless.

By generating active income to cover your wants, you allow your passive income to continue growing. Since risk assets like stocks and real estate tend to appreciate over time, reinvesting your passive income enables compounding, building even greater long-term financial stability.

However, if you ever find your motivation dwindling or experience a lull in life, you might consider one final strategy for building wealth: self-sabotage.

Self-Sabotaging Can Provide Renewed Purpose In Retirement

Perhaps the greatest risk in retirement is the natural tendency to drift toward inactivity. Without self-discipline or a compelling reason to stay engaged, the default path often leads to complacency. This is why intentional self-sabotage can be an effective strategy to keep yourself motivated and active.

For example, in 2H 2023, I self-sabotaged by purchasing a home I didn’t need. This decision cut my passive income by $150,000 per year. For the first three months after purchase, my anxiety to provide went up given our finances were more vulnerable. However, knowing that my daughter would start school full-time the following September, I recognized I had an upcoming void to fill.

More Motivation And Purpose To Earn

Since then, the lack of liquidity has driven me to take on part-time consulting for four months, which re-opened my eyes to the early-stage startup world. The experience also gave me a renewed appreciation for the freedom I’ve enjoyed since leaving my job in 2012.

Self-sabotaging also motivated me to finish a new second book with Portfolio Penguin, slated for release in May 2025. Writing a book is hard because no one is whipping you to write. It requires immense self-discipline to translate creative thoughts into a logical and entertaining narrative. Then comes the painstaking process of going through dozens of editing rounds with multiple editors to refine and polish the manuscript.

Living paycheck-to-paycheck during those six months also led me to explore more business opportunities for Financial Samurai. These ventures introduced me to new people over drinks and dinners and helped me discover products I believe will benefit readers.

Setting a clear goal to pay for my house, a massive unnecessary want by December 31, 2027, has reenergized me. Without this self-sabotage, I might end up spending my days playing pickleball and doing little else.

Embrace Your Wants by Generating Active Income in Retirement

Every dollar you earn in active income during retirement feels like a bonus. And when you earn that “gravy,” you should enjoy it—especially since you already have the main course covered through passive income.

By reserving active income for wants, you maintain discipline in managing your desires and keep alive the hunger to achieve, much like when you were actively working.

Here’s to fulfilling our wants responsibly, no matter where we are on our financial journey!

Readers, have you noticed a decline in discipline after retiring or achieving financial independence? Do you challenge yourself to earn actively for the things you want? What strategies do you use to ensure your investments continue growing, enabling more passive income and sustaining your financial freedom?

Generate More Passive Income Through Real Estate

In the past, generating passive income through real estate typically meant becoming a landlord. Today, you can easily generate true passive income by investing in REITs and private real estate funds. One option is Fundrise, which specializes in private real estate funds focused on residential and industrial commercial properties.

The outlook for real estate prices remains positive due to potentially declining interest rates, a persistent housing undersupply, favorable demographics, and a strong economy. With a minimum investment of just $10, Fundrise makes it accessible to diversify into private real estate.

Personally, I’ve invested over $300,000 with Fundrise to broaden my real estate portfolio and gain exposure to private AI companies. Fundrise is also a long-time sponsor of Financial Samurai.