You probably have friends or colleagues who maintain a line of side hustles. They do it so they can bring in a variety of income streams no matter what they are doing with a day job. If you are wondering how you can make money on the side without having to spend every spare moment on it, you are not alone. With incremental income, you can learn how to create financial security using passive methods. Here are a handful of considerations to keep top of mind.
Understanding Passive Income
Passive income is money that you earn without having to work for each individual dollar you get. Although passive income is usually related to time or money you invest, you can continue to make money long past that original investment.
Since the income is not tied to your active labor, you can have multiple passive income streams running simultaneously. Most passive income opportunities require you to put in a little time or more money to keep them going, but it is marginal compared to what you would need to do for an active income job.
Benefits of Earning Passive Income
If the idea of earning passive income seems appealing, that is not surprising. Passive income — or even having multiple streams of income that are a combination of active and passive — offers plenty of benefits.
- Financial security
- Freedom to make choices, such as moving or starting a business
- A path to retirement
It’s a myth that to retire, you must save every dime you plan to spend. If you have enough income through passive methods to support your lifestyle, you can start living on that income anytime you like.
How to Earn Passive Income
There are a wide variety of passive income streams. Some of them need a lot of money to start, but many of them don’t. You can try these examples or come up with others:
- Sell your skills: Having a day job is one way to sell your skills, but you can turn your knowledge and experience into passive income, too. Write an e-book series. Create a set of video tutorials and charge people for access. You can even monetize a blog, YouTube or TikTok channel. That way, the work you put in will continue to earn money for you — even if you are not investing in it directly.
- Rent out your property: One way to start earning passively is to accumulate property that you can use for rental income. If you own a home and decide to move, see if you can afford to get a mortgage while you rent out your old house. You can also do this with your car, spare bedroom, expensive equipment and more. Set availability to your convenience. When you are done with any of your assets, you can sell them to recoup even more of your investment.
- Start investing: If living on your investments is your goal, start building them as soon as you can. Taking a few extra dollars and putting them into a savings account or a certificate of deposit can help you get into the habit of saving.
When you are ready, try investing a little money into stocks that have good growth potential. As you accumulate experience and funds, you will likely feel more comfortable making choices using larger amounts of money. In time, the returns might be enough to give you more financial freedom — eventually giving you the ability to live on that income.
Building wealth is easier when you look for ways to do it a little at a time. You don’t need to spend a million dollars to become a millionaire, just creativity and the willingness to see it work over time. By starting with a few incremental income ideas, you can begin creating financial security for yourself today.
This infographic was created by Renovo Financial, a real estate lending group