What is Passive Income? How to successfully create freedom in your life with a passive income
I’ve worked in Corporates and Startups and other businesses. I’ve been a salaried employee, a wage worker and a consultant. And ….I’ve been an entrepreneur for a long, long time.
But one thing I know is that there are other (better?) ways to make money than working for a salary or getting paid by the hour.
Money for hours served is a pretty archaic way of looking at how we value our knowledge, skill set and our time.
If you’re looking for ways to either supplement your income or break those ties you have with the 9-5 hustle then look no further!
There’s a whole tonne of things you can do to start generating income while you’re sitting on a beach or shredding the slopes.
Does it require hard work? Yes.
Does it require some element of risk? Yes.
Does it pay off, if successful? Yes!
I’ll run through a few ways to generate a passive income stream for yourself and your family below. The main thing to remember here is that it’s all about the set up!
[Update March 2021]
Disclaimer: This post contains affiliate links for which I may make a small commission at no extra cost to you, if you make a purchase. I only recommend products I love ❤️
What is Passive Income?
Think a steady stream of funds while you sleep, ski, swim, surf, skate, sketch, salsa… [insert favourite activity here].
Passive income is when, after the initial set up and implementation phase, you earn money for little ongoing input or effort. It’s income you don’t have to swap time for in the long run.
Why is Passive Income so good?
Ok this one all depends on where your values sit. But there are a few universal reasons why passive income is good.
- Requires little time and effort once set up
- Enables you to create freedom in your life
- Lets you concentrate more on the things you love to do
- Encourages entrepreneurial activities
- Gives you a second or third income
- Creates another income stream so you’re not reliant on one source
- Provides an opportunity for remote work opportunities
- Not time dependant
Smart Passive Income
Ok, ok… so, we all know what passive income is now right. But what is it about passive income that’s so smart?
We’ve come to believe that we have to trade time for money and in this world, right now, this isn’t necessarily the best answer to creating balance and a life you love.
Passive income- while requiring a great deal of input upfront, allows you to create life on your own terms and create income streams that can set you up for living a life of balance.
The 40 hour work week is a concept that doesn’t sit well in this generation and rightly so. Im a big believer in outcomes, not outputs and if you can create amazing outcomes then the time spent is irrelevant.
Smart passive income is when you’re creating value that is independent of time spent.
5 Best Passive Income sources
Making passive income can come in many forms. The one thing though that I think strings all of these passive income ideas together though is systems and processes.
Creating systems and processes around ideas and activities = passive income creation.
1. Affiliate Marketing
This ones a goodie. Finding products and services you love and would recommend then telling people about them.
Affiliate marketing means you get a commission when someone buys a product or service that you have recommended. You set yourself up with either an affiliate program or affiliate network, then generate affiliate links for products and services you’d like to promote.
Bloggers typically are great affiliate marketers. Creating income from recommending great products they love to their audiences. Lifestyle bloggers are a great example of this. Where they might generate income from beauty or fashion products recommended on their sites.
U.S. affiliate marketing spend is due to reach 8.2 billion U.S. dollars by 2022, up from 5.4 billion recorded in 2017 – Statista
I do very well with affiliate marketing. It’s all about promoting products you genuinely LOVE, products you know other people like you will also love! If there’s one thing I can say about affiliate income – it’s that you have to truly believe in what you are promoting.
Here’s a wee snapshot at one of my affiliate programs February stats. This is a product I LOVE and use daily. I promote this product and I earn a decent kickback for doing so.
2. Property Investments
Ahhh the property market! One day it’s up- the next it’s down! But, if you’re a smart investor then you can make a passive income out of investing.
Buy a rental property and rent it out long term. This does require a lot of upfront capital. But if your market is moving up and to the right, then this is one way to see your investment increase in value over time.
You can either choose to manage your rental/s yourself or employ the services of a property manager to save you the hassle.
Short term rentals are also possible where you rent out a property for short term stays like to holiday makers or business traveler. Airbnb and other online rental property platforms makes this a pretty easy choice.
You do have to make sure youtube got yourself set up properly with housekeeping and cleaning services for turnover and a way for people to check in and check out. But there’s a tonne of great info out there on becoming a short term rental property owner.
Jenna Kutcher has some great blog posts on her site about running an Airbnb And there’s a tonne of awesome groups and sites dedicated to property investing on the internet- location dependant, so just hop on Google!
3. Online courses, guides, printables and ebooks
Soooo much you can do here. Think about what you know, then think about how you can transfer this information and knowledge in the most effective way to others …for money.
So easy to set up this type of thing. You can do this by simply adding a PDF with a sign up gate on your website – using an email marketing provider like ConvertKit.
Or you can opt to go with a platform like Podia– where they take care of all the hard stuff for you for a small monthly fee.
It’s easy to make a guide or ebook in on a platform like Canva then download it as a PDF to sell.
Amazon now sells more Ebooks than printed books… don’t you want your self a share of that goodness?
You can also create super easy printables in your niche and sell them online. Sarah Titus is the grand example of doing this well. She makes over $4 million dollars a year doing this! Yes. I said 4 million dollars a year.
4. Website and blog ad revenue
Basically renting out your digital space to other companies to advertise on. If you have great traffic to your website or blog you can earn good money from ad networks or offering banner ad placements to other businesses.
Monumetric and Mediavine are two networks that are great sources of income if you’re traffic is big enough. They require 10K and 50K respectively.
Or Google offers programs like Adsense. Which require a far lower barrier to entry.
Also read: The 3 Best ways to make money blogging
5. Angel Investing in Startups
This ones a bit controversial… because it has a large degree of risk associated with it.
Generally speaking, if you’re going to start trying your hand at investing in startups, then you can go one of a few ways.
- Join your local angel investment network.
- Try your hand at smaller time investments through online share platforms in your country
- Start small and get involved with some crowdfunding projects to see if it’s something you love (you get rewards normally, not money with these)
The big thing to remember with angel investing is that you should go into it not caring if you lose your investment. Think of it as a gift… and then if you get a 10x return… whoopie!
Angel investors often invest in 10 or more companies to get one hit. It’s risky.
There’s a lot more ways you can create a passive income to help you live the life you want to live and to set yourself up for the future.
We’ve covered 5 of them here. But one thing’s for sure. Creating another income stream independent from your 9-5 job is a great way to look after both your future self and your right now self!
Personally – I do most of these things above in varying degrees to supplement my main income source. Some are more profitable than others for me personally. But all of them form part of my overall long term financial strategy.
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Remember to get expert advice from your advisor or other financial professional when making money decisions!! We are neither.