I graduated from college with an accounting degree. I was super excited to be hired by one of the largest public accounting firms in the world. It was a great job opportunity until I realized how horrible “jobs” can be. I had to work 60+ hours a week and travel a great deal in order to collect my paycheck and climb the corporate ladder.

After 5 years of playing this losing game, I decided I wanted to be my own boss so I got my real estate license and quit my so-called good job. This move allowed me to control my schedule and income. I now had no limitations on my income and could make as much as I wanted. This was a great opportunity until I realized I wouldn’t make any money unless I sold a home. I realized my family’s income was 100% dependent upon my home sales. If I were to get sick, or injured and couldn’t work, we would be in a tough financial situation rather quickly.

I finally realized how critically important it is to create “sleep” money. Sleep money is money that flows to you while you sleep. You don’t have to work to generate this income. From this point forward, I tried to focus my time and work on creating sleep money. To do this, I needed to convert my existing real estate sales into a sleep money business.

So after 3 years of operating as one-man real estate sales team, I decided to start my own real estate brokerage. The plan was to hire and train real estate agents for my new company. My business would earn income as my real estate agents sold homes. The commissions generated by my agents would become my sleep money. Once I had agents in place selling homes consistently, I would have more time available to create more sleep money.

The way I began to see it was if we have to work, we might as well focus this work on creating sleep money. Why waste a single-minute working for non-sleep money?

What I’ve found in thinking about this over the last 10 to 15 years is most people do not spend any time, thought, or effort creating sleep money. Instead, all of their income requires their labor. They have to go to work to earn money. If they don’t work, they don’t get paid. Their income cannot compound because it requires their time and their time is severely limited.

What percentage of your time is devoted to creating sleep money?

0%, 10%, 20%, 50%, 100%?

You have two basic opportunities to create sleep money:

Convert your existing business to a sleep money business.
Start a new sleep money business.

Wondering what a sleep money business is?

Below is a summary of various sleep money business. As you review the summary, ask yourself how often these businesses are paid by their customers and what labor do they need to provide in order to get paid?

1. Insurance businesses – Insurance businesses generate monthly, quarterly, and annual income as their policy holders send in premium payments. Think life insurance, car insurance, home owners insurance, medical insurance.

2. Money management businesses – Businesses that manage money for others have sleep money businesses. They get paid consistently from their customers. A great example would be a mutual fund. The fund charges investors annual fees for their services. The same goes for hedge funds, 401k plans, and most bank accounts.

3. Software businesses – For many years, I’ve maintained a fancy CRM program. This program requires a monthly fee and this monthly fee becomes sleep money for this business. Any software requiring a recurring fee is a sleep money business.

4. Property management – Property management is one of the best sleep money businesses around. The property manager has zero risk and collects monthly income from all properties managed.

5. Utility companies – How often do you pay your electric bill? As long as power flows out of the business, money flows into the business.

6. Lending money – Does your mortgage lender have to work today in order to collect your mortgage payment? No they don’t. They get paid 360 times for making one mortgage.

7. Owning income property – Your tenants go to work each day in order to send you a monthly rent check. They work. You sleep.

8. Drug companies – My thyroid is shot. I have to take medicine every morning for the rest of my life, which means the manufacturer of this medicine will collect income from me for 40 more years.

9. Addictive substances – Cigarettes, booze, sugar. Companies selling addictive substances are sleep money businesses because their customers return on a consistent basis.

10. Gas & Oil – How often do you put gasoline in your car?

11. Memberships and continuity businesses – Any business forcing customers to pay a monthly fee. Think Spotify, cell phone, cable television.

Now I’m not saying all of these businesses are great businesses. I’m simply saying these businesses are sleep money businesses. Money flows into their bank accounts consistently from the same customers. These businesses break the labor for pay connection.

To illustrate how powerful sleep money businesses are, think about the wealthiest people in the world and see if they’re connected to one or more sleep money businesses.


Let’s take Mr. Warren Buffett as an example. Mr. Buffett owns the following businesses and investments:

Insurance: Gieco, National Indemnity, General Re

Gas/Oil/Transportation: BNSF (railroad), Phillips 66

Utilities: Berkshire Hathaway Energy, Marmon, Lubrizol, IMC

Sugar: Coke-Cola, Sees Candies, Dairy Queen, Kraft/Heinz

Lending: Clayton Homes, US Bank, Wells Fargo

Software: IBM

Continuity Businesses: AT&T, Charter Communications

Money management: The Goldman Sachs Group

Mr. Buffett’s business (Berkshire Hathaway) is focused 100% on sleep money businesses. Maybe this is why he is one of the wealthiest men in the world

If you really want to work less in the future, you have to  setup a business that provides income to you while you sleep.

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