If you are reading this article, you have probably already heard a thing or two about passive income and think it sounds great. After all, what’s not to love about having the ability to earn money while you sleep? By definition, passive income is money that you earn with little to no daily effort. Of course, that doesn’t mean that the money you desire will magically appear just because you want it. You do have to devote a good bit of time (and often money) to getting started, but once you have an income stream up and running, you can expect to keep earning money without dedicating every waking hour to managing and maintaining it.
Whether you want to earn a bit of extra spending money or you’re looking to achieve true financial freedom and gain the ability to quit your day job, there are options that are right for anyone. Keep reading to discover how to generate passive income!
What Is Passive Income?
Before we really dive into how to generate passive income, it is important to understand exactly what it is (and what it isn’t). When you go to work every day and each a paycheck, that’s active income. Active income also refers to money you earn when running your own business or working a side hustle. It’s money that you are actively working for.
Passive income, on the other hand, is money that keeps rolling in even when you are not actively working. It includes things like money from investments, income from rental properties, etc. You can’t be entirely, well, passive, about generating passive income, though. You usually have to devote a good bit of time and/or money upfront in order to set up a passive stream of income. You’ll also need to put some effort into maintaining the stream. If, for example, you become a landlord, you still have to deal with property upkeep and maintenance, collecting rent, dealing with problem tenants, etc. You don’t have to spend your entire life working to maintain a passive income stream, but you do need to put in some effort from time to time.
Why Is Passive Income Important?
We only get so many hours each day. And unlike other streams of income, passive income is not tied to time. It allows you to earn money while working a day job, spending time with family, traveling, or even sleeping. This is incredibly important for anyone who actually wants to enjoy life rather than spending every waking hour working.
Passive income can also help you build wealth. Having multiple streams of income also creates a safety net if you become unable to work or lose your job. It can help you retire early and live the life you’ve always dreamed of.
In other words, passive income is pretty amazing, and it’s important because it can help you build a safety net and prepare for the future.
How to Generate Passive Income
There are all sorts of ways to generate passive income. From traditional options like investing in high dividend stocks and buying rental properties to more modern things like renting out advertising space on your car and developing online courses, there truly are passive income streams out there that are suitable for just about anyone.
To get started, think about how much time and money you are able to invest upfront. If you’re working with a limited budget, buying rental property is probably out of the question. If you have plenty of money and very little time spare time, though, investing in the stock market could be a good choice.
Consider what interests you, too. If you love writing, put your hobby to good use by creating ebooks or starting a blog. If you’re awesome at graphic design, create downloadable cards, stationery, or decorations. It’s a lot easier to invest time and money upfront if you are working on something you actually enjoy!
Passive Income Ideas
We’ve already mentioned a few of the potential ways to start earning passive income. They aren’t the only options, though! Here are a couple of our other favorites.
Rent Your Extra Space
Do you have a bedroom in your home that you don’t use? A cozy loft over your garage? A cabin in the woods that you only visit a few times per year? Make money off your extra space by renting it out through Airbnb. Airbnb has revolutionized the ways in which people from all around the world travel. Instead of booking hotel rooms, many opt to book spaces through the site.
Become an Affiliate Marketer
When you’re an affiliate marketer, you earn money every time someone makes a purchase using your affiliate link. You can build a website, include affiliate links in blog posts, or even share them on social media. Since you aren’t the one selling the product, you never have to worry about storing inventory, shipping out orders, or dealing with customer service. When someone buys, you get paid. It’s as simple as that.
Get Cash Back with Credit Cards
It doesn’t get much more passive than getting paid to shop. Every time you swipe a credit card that offers cashback rewards, you earn a percentage back. Use your credit card to pay your bills, buy groceries and gas, etc., and pay your bill in full every month. You’ll quickly start accumulating cash that you can use for anything you desire. You could even use your cashback rewards to fund another passive income stream, such as investing!
The Bottom Line
By now, you hopefully have some solid ideas about how to generate passive income. There are all sorts of options out there, and you don’t need to be a financial guru or an entrepreneur to get started. With a bit of patience and commitment, anyone can start earning passive income and working toward building a brighter financial future.
Published by Lavismichel Inkel