The idea of earning passive income may seem like a fantasy for many people, but in reality it can be a way to slowly build wealth over time. Many people disregard passive income as a wealth building strategy, because they fail to see the long term potential value it offers. Let’s have a look at what passive income actually is, and ways that it can build wealth for you.
Passive Income 101
What is Passive Income?
Passive income is any type of income stream that doesn’t require you to put in daily work to earn it. In many cases, there is work required at the onset and perhaps at some points along the way, but there will also be times when it will generate income without any work at all. Passive income is not necessarily a side job, but often people will use their side hustle time to establish passive income opportunities. Passive income can be quite consistent or it can be very sporadic. There are some people who rely on passive income as their primary source of income, but more often than not it just helps to supplement regular income.
Examples of Passive Income
So what exactly does passive income look like? For some people, it can be as simple as putting extra money into an investment or asset account that pays interest or dividends. Each earning period, income is received and no work was done to earn it. For other people, passive income might be a rental property or leasing out an unused portion of their home or business. While there will be some initial and ongoing work required to secure a tenant and collect rents and such, the income largely is generated without daily efforts.
There are also many other types of passive income that don’t require you to really have any assets or cash to get started. Selling a digital product, for example, can be a fabulous way to earn passive income on a hobby. If you love to take photos or edit them, consider uploading and selling stock images or photo filter templates. Do you dabble in herbal remedies or love to cook in your spare time? Consider writing and then self-publishing an ebook to sell.
Perhaps you have in-depth knowledge about something that others would want to learn. You could develop an online course to sell or record a paid webinar training. Additionally, there are hundreds, if not thousands, of other ways to earn passive income from things like blogging, YouTube channels, app building, vending machines, affiliate marketing, advertising on your car, and peer to peer lending.
Marion was a stay at home mom who wanted to be able to help contribute financially to the family’s savings. Flexibility was extremely important, so she began pursuing passive income opportunities that she could work toward when her time allowed. Each day during the kids nap times, or after she tucked them in at night, she would write. She started with blogging, simply sharing her “mom” knowledge with the world. She later branched into recording podcasts, created a Youtube channel, and now she even has eBooks and webinars on various parenting subjects.
While success didn’t happen overnight, Marion turned her life experience and her love of writing into several passive income streams that have created enough wealth to help her kids pay for their college educations. Marion truly learned that passive income is a key to financial freedom!
While receiving a few cents a day from blog advertising, a little rent from placing an ad on your car, and a small royalty payment each month from ebook sales may not seem like it would create wealth, it does add up over time. In fact, if you were to earn just $10 of consistent passive income per day, it would yield over $3,500 in extra income per year. Do this for ten years and you could potentially increase your net worth by nearly $40,000. While it isn’t a “get rich quick” strategy, passive income does have the potential to grow over time, yielding amazing results.
Want to explore passive income opportunities further?