Make Money Doing Nothing? The Beginner’s Guide to Passive Income Ideas
You’ve probably heard the term passive income.
It sounds appealing, right? According to the definition of passive, it would mean you’re earning income without participating or having to do anything at all.
Free money? Sign me up!
Unfortunately, that’s a common misconception. Just like you can’t pluck money from a tree, you can’t expect to earn passive income by being, well, totally passive.
However, it’s a viable way to make money and offers you security and freedom.
If you’re interested in establishing a flow of passive income, here’s a guide to understanding the term and getting started.
What Is Passive Income?
Passive income is money flowing in from a source where a person is not actively involved. Common examples include rental income, investment dividends and online business profits. It offers financial security with minimal ongoing effort after the initial setup.
Todd Tresidder, a wealth coach and the founder of Financial Mentor, defines passive income as “income that comes in without regard to your time.” He’s a big proponent of this approach and has several passive income streams.
However, remember that the initial setup may take a lot of time and energy.
“Often in passive income, you have to commit the time and energy upfront,” Tresidder said. He describes it as a machine; you must build the machinery before it can work without your assistance. Another name for passive income is “lagged income” since the income follows the setup.
Make Even More Easy Money Outside of Passive Income
You’re here for passive income ideas — and we’ve got plenty of them. But what can you do with that extra time? You could make even more easy money with some of our favorite ways listed below.
| Offer | What You Can Earn | What You Have to Do | Take Action |
|---|---|---|---|
| InboxDollars | $225/month | Complete short surveys | |
| FreeCash | $1,000/month | Simple online tasks | |
| GoBranded | Up to $140/month | Share your honest opinion | |
| Solitaire Cash | Up to $83 per win | Compete against other players | |
| Bingo Cash | Up to $83 per win | Compete against other players | |
| Kashkick | $1,000/month | Try out apps |
What’s the Importance of Passive Income?
Why is passive income important? “Freedom,” Tresidder said. “The reason you establish a passive income is because it’s not connected to your time, which gives you the freedom to do other things with your time.”
Because Tresidder has multiple channels of passive income, he uses his freedom to travel when his kids are on summer break. For example, last year the family took a two-month trip to Europe, where they hiked Spain’s 500-mile Camino de Santiago.
“I’ve designed my life to be free and flexible,” he said.
Passive income is also important for the financial security it can offer. Although you might take a risk when first establishing it, if it proves to be a steady flow, it offers great security because it’s not connected to your time.
So, for example, if your spouse gets sick or if you can’t work, the idea is you’ll still be earning passive income to pay those never-ending bills.
8 Benefits of Passive Income
Passive income is an attractive way to earn money without the constant active involvement required in traditional jobs. It offers several benefits that can significantly enhance your financial health and lifestyle. Here’s a more detailed look at these advantages:
- Enhanced Financial Independence: Passive income streams, once established, can provide a steady flow of earnings, reducing dependency on a full-time job. This independence allows for more control over your financial future.
- Greater Flexibility and Freedom: With passive income, you gain the flexibility to choose how and when you work. This freedom enables you to allocate more time to personal projects, hobbies or quality moments with loved ones.
- Consistent and Predictable Income: Passive income sources like rental properties or dividends provide a predictable and stable income stream. This consistency is particularly valuable during retirement or economic uncertainties.
- Opportunities for Wealth Accumulation: Over time, passive income can lead to significant wealth accumulation. Investments that appreciate in value, such as real estate or stocks, can substantially increase your net worth.
- Tax Benefits: Certain passive income ventures, like investing in real estate, offer tax deductions and benefits. These can include deductions on mortgage interest, property taxes, and maintenance expenses.
- Diversification of Income Sources: By having multiple streams of passive income, you can safeguard against financial instability caused by job loss or market fluctuations, thus ensuring a more secure financial position.
- Location Independence: Many passive income opportunities, especially those based online, allow you to manage your income sources from anywhere, providing the freedom to travel or live in different locations.
- Leveraging Time Effectively: Once set up, passive income endeavors typically require minimal ongoing management. This efficient use of time means you can focus on other income-generating activities or enjoy leisure time while still earning.
13 Passive Income Ideas
Just like everyone else, passive income has various definitions. The one you’ll want to study is from the IRS, which has its own, very specific definition. Take a look at that before filing taxes.
In the meantime, you can start small with these ideas, then work your way up like Tresidder did. Think really big like starting a business or investing in real estate.
Really, the possibilities are endless, so don’t begin to consider this as a finite list.
1. Sell Your Photos (Nope, You Don’t Have to Be a Professional)
Those thought-out photos you take can get you more than likes on Instagram.
You can upload iPhone photos to stock photography sites. Those sites actually are looking for more realistic images rather than the “perfect” photo. Then, you just wait for someone to buy your work.
You likely won’t become a millionaire; Foap, for example, splits the profits with the photographer evenly. However, you can step up your game if you have a nicer camera.
2. Investing
We know this one can sound intimidating if you’re a beginner, but it’s one of the best ways to earn passive income. Investing apps like Public are a great place to start. You can pick one that caters to newbies, hands off investors or people with a little more experience.
3. Create a Website
…like everyone else you know, right?
Starting a profitable website can be difficult because of competition, so you’ll have better luck breaking into a niche market.
The upside is that it costs little money to start one — and there’s little risk. Your startup expenses might only include purchasing a hosting package.
To earn money through your site, learn about affiliate sales. For that, you can list products (even if you didn’t make them) that link back to Amazon via Amazon Affiliates. If a consumer clicks on a link and buys the product, you bag some money.
4. Make Money Off Your Extra Space
Do you have a room? A garage apartment? A tent? Establishing passive income in real estate doesn’t have to start with a huge investment.
You can list your space through Airbnb.
Remember that hosting laws vary from city to city. So make sure you understand the rules and regulations applicable to your city and listing.
5. Buy a Gumball or Vending Machine
Yep — those gumball machines you see in restaurants. You keep most of the profits from those.
You can also look into the same idea with vending machines. There will be some management you have to do, but, again, it’s one of those hybrid passive income sources.
Plus, it’d be kind of cool to say, “Fun fact: I own a gumball machine.”
6. Create an E-Course
Whatever you know a lot about — whether it’s from a hobby or a job — you can put together an online course for people to buy.
Now, don’t go in setting your expectations that high, but with a solid platform like Udemy, you could start raking in passive income this year.
7. Sell Random Stuff on Sites Like Zazzle
By random, we mean… pretty random.
If you have art, designs or photos, you can publish them on any kind of product you can think of: invitations, T-shirts, mugs, pillows, phone cases… Then set your own royalty rate (that’s the percentage you’ll rake in from 5% to 99% ), and you’re done.
You won’t have an inventory to handle (no production, no shipping).
Find out more about selling on Zazzle, or look into other platforms, like Amazon.
8. Get Cash Back with Credit Cards
You’re already shopping, right? A passive way to earn income is to sign up for credit cards that offer cash, or points, back.
We created a list of cash back cards that can help you do that.
It’s important to remember that for this to truly be passive, you’re not spending money for the sake of earning points or cash back; you’re spending it like you normally do. And, you’re only spending what you can afford to pay back.
9. Teachers (or Not): Sell Lesson Plans
This idea is especially useful for teachers who are already frantically cranking out lesson plans. If you find one you’re really digging, put it up for sale on a platform like Teachers Pay Teachers. This helps other teachers across the world — and gives you some income.
10. Stick an Ad on Your Car
Do you already drive a lot? If so, consider slapping an ad on the side of your car. You could earn $100 a month from a platform like Carvertise with no upfront costs.
You’ll likely have to answer questions about your driving habits, and you’ll have a better chance of getting selected if you live in a bigger city and drive a lot.
11. Make YouTube Videos
Think you have something that might go viral? Or have expertise in something folks might be interested in? Make a YouTube video, and establish a passive income.
One of our contributors, Steve Gillman, has done just that. He’s monetized his YouTube videos with Google AdSense. For example, he shot 10 videos about ultralight backpacking. No, they didn’t become huge hits, but he has made more than $1,000 over the years.
We have a guide on how to make money on YouTube.
12. Publish an E-book
If you have a way with words, or an intriguing life experience, you could write a book. But there’s no need to send it off to all the major publishing houses in New York City.
You can publish e-books through Amazon’s Kindle Direct Publishing platform. This is something Gillman also did.
He wrote a book in a week. Note: E-books don’t have be hundreds of pages long. They can be as short as 6,000 words.
After publishing it on Amazon, he started making $350 a month.
13. Rent Out Your Car — or Other Stuff You Don’t Use Regularly
Got a car? A driveway? Some tools? Baby gear? Whatever it is you have, you can probably rent it out.
Just like renting out your space, this will require some maintenance and upkeep unless you go through a broker, but it can yield some solid passive income.
How to Start Your Passive Income Journey
Embarking on your passive income journey can be both exciting and daunting. Here’s a step-by-step guide to help you get started:
- Assess Your Financial Situation: Begin by evaluating your current financial health. Analyze your income, expenses, debts and savings. Determine how much capital you can initially invest in your passive income ventures.
- Set Clear Goals: Define what you want to achieve with passive income. It could be financial independence, additional income for retirement, or saving for a specific goal. Be realistic and set measurable and achievable targets.
- Educate Yourself: Invest time in learning about different passive income streams. Read books, attend workshops or take online courses. Understand the risks and rewards associated with each type of passive income. Define what you want to achieve with passive income. It could be financial independence, additional income for retirement or saving for a specific goal. Be realistic and set measurable and achievable targets.
- Choose a Suitable Passive Income Stream: Select a passive income route that aligns with your interests, skills and financial capacity. It could be real estate, stock market investments, creating digital products or starting a blog. Consider starting with one passive income stream and gradually diversifying.
- Develop a Plan: Create a detailed plan for your chosen passive income stream. This should include steps for setup, a timeline and a budget. If necessary, consult with financial advisors or experts in the field.
- Start Small and Scale Gradually: Begin with manageable projects to mitigate risks. For example, start with a small investment property or a basic website. Reinvest your earnings to grow your passive income sources.
- Monitor and Adjust: Regularly review the performance of your passive income streams. Be prepared to make adjustments, whether it’s tweaking your strategies or shifting to more profitable ventures.
- Stay Persistent and Patient: Understand that building passive income is a long-term process. Patience and persistence are key. Celebrate small victories and stay motivated.
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FAQ on Passive Income Ideas
Passive income is earnings from a source that does not require active involvement or daily management. Examples include rental income, dividends, and earnings from online businesses or investments.
Begin by assessing your financial situation and setting clear goals. Educate yourself about different passive income streams, choose one that aligns with your interests and financial capacity, and then develop a strategic plan to start.
The amount varies depending on the type of passive income. Some online ventures may require minimal investment, while real estate can require a significant upfront sum. It’s important to start with what you can afford and scale up over time.
Initially, setting up a passive income stream may require substantial time and effort. However, once established, it should require minimal active involvement, though occasional maintenance and oversight are necessary.
While it’s possible, it depends on the amount of income you can generate and your financial needs. Building a sufficient and reliable passive income stream to replace a full-time job often takes time and strategic planning.
