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Do you have a desire to travel the world, but feel shackled by your 9-5? Ever dream of standing up from your cubicle and never coming back? Many Americans daydream of seeing the Eiffel Tower under a starlit sky, hiking Machu Picchu at sunrise, or learning to make authentic Italian pasta, but they don’t know how to turn that daydream into a reality.
If you have serious wanderlust and wish there was a way to ditch your full-time job, you may want to learn more about passive income and how you can make it work for you. Whether your goal is to eventually quit your day job and rely solely on passive income or you just want some extra cash flow to use up those vacation days in style, let’s explore what passive income is, whether it is right for you and your family, and some of the top ways to earn money while you sleep.
What Is the Difference Between Passive And Active Income?
Active income is what you’re currently accruing if you work a 9-5 job. It’s the direct result of an active effort on your part to make money. If you stop making money the day you don’t show up for work, you’re earning an active income. With an active income, your time equals money.
Passive income is money you can make without an active effort. While there is still work involved in creating passive income for yourself, you have much more flexibility and potentially more financial freedom when you focus on increasing your passive income (or adding a passive income as a cushion to your active income). Examples of passive income would be earnings from an online class offered, income from inventing an app, or from investing in the stock market.
How Do I Know What’s Right For Me?
While passive income may seem like a “get out of jail free card” or a free pass to quit your 9-5 job, don’t be fooled. Setting up a passive income stream for yourself that is equal to your earnings from a full-time job takes a lot of work upfront and a heightened sense of self-awareness. You must be ready to tap into what you’re good at and discover and hone marketable skills in high demand.
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If you’re someone who prefers security and stability, a traditional full-time job may be a better option for you. If you don’t mind taking a little risk and putting in some effort upfront, creating a passive income can allow you the freedom to travel the world and pursue your passions beyond the office cubicle.
Starting out, it’s a great idea to keep your day job while you begin to build a passive income that works for you. If you try it out and like the feeling of having your newfound passive income supplement your active income, many people choose to pursue both at once. Let’s take a look at some tangible business options for accruing passive income and creating the life of your dreams.
Start A Blog
Do you love writing? Are you especially knowledgeable in a certain topic? Running a blog is a popular and lucrative passive income business idea. The downside is that it takes some time to build up an audience. It’s best to focus on a niche topic like fitness tips, food blogging, or lifestyle and design blogging.
Once you have created an audience, you can monetize your blog by selling a product, a skill, or utilizing sponsored posts or affiliate links. For example, if you’re an exercise science expert who starts a blog with helpful fitness tips, you can begin to advertise your personal training services, sell workout videos, or create a line of fitness equipment. If you run a food blog with a large audience, you can partner with your favorite brands and recommend them to your readers through affiliate links or sponsored posts while making some extra cash.
Become An Influencer
If you love scrolling the ‘gram, consider monetizing your screen time by becoming an Instagram influencer. The key to becoming an influencer on Instagram is very similar to becoming a successful blogger: create a niche, and create compelling content within your niche until you begin to amass a large number of followers. Once you have a large enough audience, brands will begin to reach out to you to make sponsored posts on your account.
This is a passive income idea that you have to keep up with at least once a day, but if you’re a social media fanatic, it won’t seem like work. The trick to becoming an influencer truly lies in the number of followers you have, and in order to gain followers, you have to create engaging content within your niche and post constantly. It’s recommended you post at least once a day on your main page and at least 10 stories per day to get maximum engagement. Don’t forget to utilize relevant hashtags!
Invest In Real Estate
If you want to diversify your assets and create a steady stream of passive income, consider investing in real estate. Purchasing a rental property like a condo, house, apartment means you are investing in a tangible asset that you can control, making it a more concrete business option than those discussed previously. You may even want to take on bigger investment opportunities by investing in commercial real estate.
Many view this investment as unattainable, but you don’t have to be rich to buy a rental property. Consider getting an investment property loan to get started, and help make your dream of investment come true.
While it is a surefire way to create additional income eventually, it does not come without risk. When you invest in real estate with the intent to create a rental property, you become a landlord. This means you have to take responsibility for building repairs, juggle complaints from tenants, and maintain enough cash flow to sustain you through possible periods of vacancy. While this passive income option will grow with time as your rental property appreciates, it does take some money and time to get started.
Opening a dropshipping store is an easy way to begin earning a passive income. With dropshipping, you search for in-demand products and then sell them online to paying customers. Essentially you are building your own online business where you choose what products you want to sell and set the price.
When the customer places an order, you forward it to a supplier who has given you their wholesale price. The supplier fulfills the order for you and ships it to the customer while you keep the retail mark-up profit. The beauty of dropshipping is that you’re essentially curating a collection of whatever wholesale items you’d like and keeping the profit from your markup.
Monetize Your Creativity
Are you an artist, printmaker, or graphic designer? If you are a creative individual with a desire to create passive income, consider selling your designs on merchandise to sell online. Start by creating an eye-catching design of something that you’re passionate about. You can create a brand and build your own products by printing your design on mugs, totes, t-shirts, hats, and more.
Make it low-stress by letting an online company handle the production and order fulfillment so you can focus on your next great design. There are many sites that will produce and ship the products for you so you don’t even have to think about it! Be sure to share your creations on social media as well by creating an Instagram account to showcase your products. Combining some of the principles we discussed earlier, you can amass a following of potential customers by creating engaging content for a niche audience.
Invest In The Stock Market
Do you have a passion for reading about business? Have you always been interested in how top companies are performing in a given year? You may be interested in turning your business expertise into a lucrative investment by learning more about the stock market. Investing in stocks is pretty passive, but gaining the knowledge to make the most of your investment is active.
The stock market is a fun investment choice, as you can choose to go all in and invest large amounts of money or start as small as you’d like with a stock trading app. 90-year-old business tycoon Warren Buffett says he starts by reading 500 pages of business reports per day to gain the knowledge needed to trade like a pro. While you don’t need to put in that much effort, his point still stands: invest smart and do your research to find true success, in the stock market and in life.
This is not a pyramid scheme or a way to “get rich quick.” Building passive income requires time, effort, and energy along with the willingness to tap into your own personal skills. If you start now and build passive income as you’re working on your active income, later on down the line you can have the freedom to live the life you desire while making money in your sleep.
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