Are funds a little tight for you? Do you want extra money, but don't have time for a second job? Passive income might be the solution to your problems.
Passive income is "revenue that takes negligible effort to acquire." In other words, you can make money without much effort compared to a 9-5 job.
For example, if you have a savings account at your bank, you probably draw some interest on it throughout the year. You don't have to do much work other than keeping money in the account to draw interest.
But how?
You might be thinking that you don't make much interest on your savings for it to be considered passive income. Luckily, there are other ways to start making passive income.
How to Get Started
The first step to start making passive income is to take a personal assessment of your skills, items, or money.
Consider the following:
What skills do you have? (Writing, teaching, baking)
Are there any items you're willing to part with? (Think: clothes, shoes, collectibles)
How much money do you have saved?
You can use any of these to consider your next passive income stream. You can choose one or multiple. There is one thing to keep in mind: you'll still be responsible for taxes, even with passive income. Check out this Byte on how to file income taxes.
Using Your Skills
You may think you don't have a particular set of skills to use as passive income. However, everyone has skills or can develop skills to make money.
Consider the following:
Do you like to write? You could sell short stories or self-publish eBooks.
Can you code, knit, or write calligraphy? You could create courses.
Do you teach? You can create lesson plans/resources for other teachers using platforms such as TeachersPayTeachers or TeachSimple.
If you like to provide your opinion, you can get paid to take surveys using paid online survey sites.
Another possibility is to create and upload content to social media. This option will take longer to turn a profit compared to other options because you will have to grow and maintain a following. Check out these Bytes on becoming a content creator and starting a YouTube side hustle.
You'll also have to compete against other creators depending on what niche you decide to pursue. However, if you can grow your following, you can use affiliate marketing to start making passive income.
What's Affiliate Marketing?
Affiliate marketing is when a company pays you to share links for their products with your followers. When one of your followers buys something using the link you shared, you'll receive compensation.
Selling or Renting Items
Maybe you're interested in selling what you have. You'd receive the money instantly compared to building a following. Look around at what you have and you might be surprised at what treasures you possess!
Think of collectibles, electronics, or clothes you're willing to part with that are in great condition or possibly still have tags. Marketplaces such as eBay or Poshmark are just a few suggestions to consider selling your items.
You could also sell digital items, such as images, PDFs, and graphics on e-commerce platforms.
Other Possibilities
Do you live near a venue? You could rent out your driveway for event parking.
If you own a car, some companies will pay you to place ads on your car. Consider it a moving billboard.
If you have the space, you could also rent out a room. (If you're a renter, check your lease to see if this is okay.)
You can also create apps and sell them in the Apple or Google Store.
Use Money You Have
Photo by Austin Distel on UnsplashSo, maybe you have some extra money sitting around and want to put it to work. It sounds like a conundrum, but you can start making passive income by spending money.
Get Paid to Shop
Some sites such as Rakuten or PayPal Honey give you the ability to receive cash back when you shop online. If you shop a lot, you can earn more money by doing what you love. They will even provide you with discount codes to lower your bills.
If you own a credit card, one of the perks might be receiving cashback for some or all purchases. If you don't have a credit card and are considering it, check out this Byte on choosing a new credit card.
High-Yield Savings Accounts
This is not your typical savings account at your brick-and-mortar bank. High-yield savings accounts help your money grow faster by giving you a higher interest rate.
In the USA, you can still access your money when needed and it's backed by the FDIC up to $250K like a traditional savings account. Shop around for a high-yield savings account because some will require minimum deposits.
Bonds
Bonds are investments that allow you to lend money to governments and companies. You hold the bonds for a certain period and cash them out after they mature. They earn interest — however, you'll receive a lower return compared to other investment options.
Certificates of Deposits
This is a type of savings account that requires you to lock money in for a fixed amount of time and interest rate. Your money will be accessible, but you'll pay a penalty if you withdraw before the fixed time.
Bonds and CDs are more beneficial for people with long-term goals.
Stock Market
You can buy stocks that pay dividends. If stocks pay dividends, you'll receive payment based on the company's performance. These could be distributed quarterly, semi-annually, or annually.
Stocks do have a higher return compared to other investment options listed. However, these are more volatile.
If you're not comfortable with stocks, you could try index funds to start making passive income — but be aware that you could make a lot of money on your investment, or you could lose everything. Check out this Byte on investing in the stock market as a beginner.
Quiz
Franklin has saved $500. He wants a good return for his money that is low-risk, but allows him to access his money whenever he wants. What is the best choice to park his money?
Take Action
Now, that you have some ideas in mind for making your money, it's time to start making passive income with your next steps:
Your feedback matters to us.
This Byte helped me better understand the topic.