“Passive income provides financial flexibility and freedom.”
With the world’s current precarious financial state, we’re all trying to get by in any way we can. It’s the era of influencer income, side hustles and the gig economy – and sometimes, it feels a little overwhelming. The nine-to-five schedule is demanding enough as it is (a four-day work week is looking really good right now). Do we really have to add an after-hours job into the mix?
Unfortunately, there’s no blanket rule answer. When it comes to finances, everyone’s situation is different, and we all need to do what’s best for us. In saying that, there are a few ways to generate passive income outside of the nine-to-five. Below, the Founder of Ladies’ Finance Club, Molly Benjamin, explains passive income and gives her top tips for making that extra cash.
Passive income is money generated that requires relatively little day-to-day attention once you complete the upfront investment to set it up. Unlike active income, which is earned through traditional employment or work that requires continuous effort and time, passive income provides financial flexibility and freedom by allowing you to earn money with minimal effort to maintain.
A great example of this is to think about the difference between rent and wages! There’s an initial investment to set up the property, then once rented, it’s low maintenance from there to earn income on. Compare… [this] to wages, which require showing up every day to earn that money.
[Firstly,] to set up for success, identify your passive income goals. Determine your financial goals and how much passive income you want to generate. Having clear objectives will help you stay motivated and focused. Get super clear on why you want to generate passive income, as this will be your key source of… motivation to keep going and make it happen!
Create a budget. Establish a budget to track your income and expenses. This will help you identify how much you’ve got to invest in your passive income venture (to get it started). It will also help hold you accountable to ensure you don’t overspend and help you understand your profits when the money starts coming in!
[My next tip is to] mirror success. Continuously educate yourself about different passive income opportunities, learning from those who have already done it successfully! You don’t have to pave the path yourself. Follow in the footsteps of those who already have to fast-track your success!
Be patient and persistent. Building significant passive income takes time. Be patient, stick to your plan and remember why you’re doing it to keep you motivated. [And make sure to] monitor and adjust. Regularly review your results! If it’s not meeting your goals, time to pivot. Adjust your strategy as needed to keep increasing your results until you hit your goals!
Invest in stocks and dividends: Invest in dividend-paying stocks or index funds that distribute regular dividends to shareholders.
Real estate: You’ll need to purchase, prepare and manage a property but once you’ve done the initial set-up… it can provide you with a consistent and predictable income.
Digital products: Develop and sell digital products online like e-books, online courses, stock photography, workshops, designs and more. If you want to learn how to start a side hustle like this, join the waitlist for our Side Hustle Kickstarter program here!
Start a blog or YouTube channel: Create a blog or YouTube channel around something you’re passionate about, and monetize it! You can do this through ads, affiliate marketing, sponsorships and more.
Affiliate marketing: Affiliate marketing happens when you share and recommend products to others through your own channels, and earn a commission each time someone purchases the product. Popular ways to share affiliate links include social media, websites [and] email newsletters.
Royalties from creative work: If you’re an author, musician or artist, royalties from your creative work can be a source of passive income.
Rent out your car park and/or car: If you have a space to park a car on your property that you’re not using, you can cash in by renting it out to others. Some may want to park their car when commuting to and from work or for the longer term. You can also offer to rent out your own car through Uber Car Share!
Rent out a room: Instead of purchasing and renting out a home, you can start small by renting out one of your rooms. It could be for a short-term rental (like Airbnb), or even as a space for someone to store their items in (people are always looking for extra storage!).
Open a high-interest savings account: By depositing money into this account, you earn interest over time without any additional effort. This interest is essentially ‘free money’ that accumulates as your savings grow through a safe, low-risk option for beginners to start earning income.
Be a micro-influencer: Micro-influencers are everyday people with a smaller social media following (usually between 1,000 and 50,000 followers) who have the ability to influence their followers’ purchasing decisions. Micro-influencers often have a very engaged and loyal following, which makes them ideal for promoting products or services.
‘Set and forget’
While they’re less work than a regular job, they still need some attention sometimes. Passive income often requires an initial effort, investment or ongoing monitoring. While it can be less time-consuming than traditional work, it’s not entirely hands-off. So get ready to go all in at the beginning, to reap the rewards down the line.
‘Quick and easy cash’
It’s more like a slow-cooked meal than fast food. It takes time to cook up those earnings! Building sustainable passive income streams takes time and persistence. It’s not a get-rich-quick scheme. So make sure you know WHY you’re doing it to keep you motivated throughout the whole journey.
‘No skills needed’
Many passive income opportunities require skills, such as investing, content creation, or marketing, to be successful. So be open to learning!
Passive income sources can be unpredictable, subject to market fluctuations or changes in demand, so they aren’t always guaranteed (but your effort to make it happen can be!).
‘No tax worries’
The taxman might still come knocking, so keep an eye on that. Depending on your location and the source of passive income, you may still have tax obligations – best to speak to an accountant to prepare yourself accordingly.
For more on passive income, head here.
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