Wouldn’t it be great to earn a paycheck without having to punch a time-clock? Imagine that your bank account is growing while you sleep. With a steady passive income stream, this reality could be yours.
What is Passive Income?
While the IRS definition is a little more specific, passive income is typically understood to mean income earned without having to get up and go to work each day.
Whether you make money off of something you did once or let your possessions work for you, there are a multitude of earning possibilities. This is opposed to active income, which is income that regularly requires products to be produced or services rendered.
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Active vs. Passive Income
Active: The benefits of earning passive income are manifold. When you rely on active income, you may not realize that you are actually placing a cap on your daily earning potential. An artist can only create so many paintings without having to stop to replenish supplies. A chauffeur can only drive so many miles without sending the limousine for repairs.
Passive: True passive income has limitless earning potential. Not only that, but since you aren’t tied to a desk you are free to engage in many more business endeavors than you could otherwise. While your friends are stuck working a 9-5, you have the freedom to take that luxury vacation that you’ve been dreaming about forever.
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How to Get Started
There are many ways to get your passive income stream going, it just depends on where your talents lie.
Real Estate
Even within this category, there are options: There’s the traditional route of buying properties and renting them out. If you already own a home, you could rent out a spare room.
- If you have the luxury of a vacation home, someone working out of town needing professional travel accommodations may prefer that to another run-of-the-mill hotel room.
- If you are renting your residence, check local laws on subleasing in your area before listing your space on Airbnb for the weekend. You don’t want your super crashing any parties while you’re away from home!
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If buying property is out of your price range, you may want to look into real estate crowdfunding platforms, such as RealtyShares or Fundrise.
- Through crowdfunding, many investors pitch in together on a property but each platform has its own policies for exactly what each investor owns. Be sure to read the fine print carefully before deciding on the platform that is right for you.
Start Your Portfolio
Investing gets easier and more accessible every day. Both the Apple and Android app stores have apps, like Acorns or Stash, that make getting started in the stock market easy for beginners with minimal initial investments.
Open a New Bank Account
Keep an eye out for banks advertising perks for new account holders. Often banks will offer bonuses for opening a new checking or savings account, with stipulations such as depositing a certain amount or spending a minimum amount within a specific time period after opening the account.
Write a Book
- It does take a lot of work up front, but if you enjoy writing it can really pay off. Depending on how you published your book, you will earn money differently.
- The most common earning method for authors is through royalties, which give you a percentage of each sale. If you only sell a few copies each year, that is still an opportunity for long-term earnings.
- The more you publish, the greater the likelihood that you will sell more units. If you develop a fan-base, you have just earned yourself a dedicated set of customers for anything else that you release.
Cash Back
Chances are you are already regularly spending money on something. Why not get something back for things that you do already? Rebate services will repay you a portion of what you spend on everyday items. You can register your credit or debit card with sites like Ebates to get a percentage of your purchases back as you shop online.
Other options are apps like Ibotta that give you a list of specific items and how much you will get back for your purchase. Even less restrictive apps like ReceiptHog or ReceiptPal will give you points for each receipt that you can eventually trade in for cash.
Create Content
If you are good at something, you could create an online course to share your skills with others.
- Once you make your lesson plans, ebooks, videos, or whatever your teaching tools may be, you charge for access to the materials. Once your students sign up, you can regulate how and when they receive the course materials while all you have to do is sit back and collect the fees.
Are you more of an entertainer? YouTubers are just as popular as any other celebrities these days. They make money from the ads on their videos, and you can, too. The possibilities for passive income in the age of the internet are truly endless.
Rent Out Your Stuff
Do you own power tools? Do you have an extra luxury car in your garage? When you aren’t using your things, you can make a little extra cash by loaning them to someone else!
Start Your Own Business
Starting your own business is usually seen from the active income perspective. However, there is the option of starting your own business and letting someone else run it. Because you own the business, you reap some of the profit. You can even opt to remain the face of the business and make the occasional professional appearance.
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However you choose to get in on the action, setting up a steady passive income definitely makes life easier later on. Once you’ve hit it big, you’ll really be going places.
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Written By: Amber M. Smith