Creating a passive income
You may have heard the term passive income and wondered what that meant or perhaps you are intrigued to see if you could make it work for you. It sounds a little too good to be true, though right? How can you earn an income (passively) without putting in any work? Let’s take a look at what it really means and how you could benefit.
What is passive income
Passive income refers to a way in which you can continue receiving an income from an activity, even after the work has been done. This could be royalties for books or music, profit from investments, courses you created, downloadable documents you sell, an ongoing commission from a transaction etc.
However, as you can see most of the options do require you to do some work up front before you can earn ‘passively’ from them. You may also find you need to do some maintenance on these projects so that they continue to make a profit for you over time.
Additional income stream
What passive income can do is provide multiple income streams that can work well in addition to your primary career or business. Having more than one source of income allows you to weather any economic fluctuations as you are not reliant on one employer or money from a specific business interest. It will enable you to have funds to fall back on in an emergency and may be the difference between being financially secure and falling into debt in a time of crisis.
Some people see passive income as a way to escape the 9-5 and be in charge of their own financial destiny. Perhaps they wish to travel or work in a way that is not conducive to a traditional working arrangement. You may have a family you need to work around or just enjoy having multiple projects that all earn you money. What could be better than seeing funds continuously come in from a piece of work that you did in the past?
Not a golden egg
You are probably not going to become a millionaire overnight though! Creating a passive income takes a lot of work up front. It’s no different from any other enterprise in that you need to do market research so you can understand if what you are creating is wanted by customers and also financially viable.
You also need to develop your idea to create a sellable product, let people know it exists and also have a way for them to access and pay for it without input from you. Not only are there demands on your time, but there may also be costs involved that will eat into any profit created.
However, there are financial rewards to be had if done correctly. Let’s look at some ways you could earn a passive income.
One way to receive an ongoing income or a profit in the future is to invest your money. However, if you have specific goals you wish to achieve with your investments, then consider seeking professional financial advice. Remember, investments can go up as well as down so when considering how best to utilise the funds you have available also consider what risk you could financially bear – find out more about investing here.
Start a blog
This is not necessarily a quick route to an income. However, successful blogs do also gain interest from advertisers who will pay to be on your website, or they will give you commission for anyone clicking through to their site. Google Adsense will also pay to place ads on your blog.
In addition you may find that brands you align with offer you affiliate links that you can display on your blog. This is a link to a specific product on a company’s website that you receive money from if someone from your blog clicks through and purchases the item.
It will take time to build an audience and for them to trust you. If you appear just to be pushing companies that are not aligned with your customer base or the brand you have created, then your blog may not be successful or generate the income you expected.
If your blog is a topic people feel passionate about, and you are seen by your audience as an expert, you may also be able to create downloadable guides that you can charge a fee for.
Obviously, a blog takes work and is an ongoing project, while you can potentially earn an income from sections of it that require little or no input from you, you will still have to be continually updating it so that people have a reason to keep coming back.
Creating a YouTube channel can be an excellent creative outlet and allow you to explore a passion you have or just share your world with others. The way you receive money is by having ads embedded in your videos, which is enabled through the YouTube platform. You will earn revenue based on how many people watch your videos and therefore also watch the ads.
This is a long-term venture, you will need to build up an audience and get found by people who don’t yet know you. It can take time to have an audience size that brings you any meaningful return.
Patreon is a platform that supports creators to connect with their audience and receive additional income. Once you have built an audience that likes what you have to offer Patreon can be a way that they can show their support financially. Many YouTubers, bloggers, podcasters etc. use Patreon as a vehicle for their supporters to provide them with funds so that they can keep making the content their followers enjoy.
Some creators take it a step further and build subscription services where their supporters can pay a monthly fee in exchange for exclusive content on the Patreon platform and even access to the creator themselves.
Whether it is a novel, short story or a how-to, eBooks can be a great way to generate passive income as once the upfront work of writing the book is done you can continue to receive money every time it’s downloaded.
You may choose to publish it digitally like you would a traditional book so that people can find it online. Or if it is a how-to eBook and relatable to your business, you may choose to host it on your own website and signpost people to it via social media and email marketing.
Are you an expert in something? Do you have expertise in your chosen field of business that you could share? Creating an online course that meets the needs of your customer is a great way to generate income and potentially extra custom for your existing business.
There are businesses out there that want to pay you just for doing your regular shopping. From cash back websites to credit cards offering cash back when making purchases you could be earning while you go about your normal life.
What passive income will you create?
There are many options for creating a secondary income, not just those listed above and enterprises that continue to earn you money long after the hard work has been done are the holy grail of passive income.
If you have a successful business already or want to increase your company’s profits, then generating online course or guides may be a way to improve your customer base or the engagement you have with your audience. It will help you be seen as an expert which can only be a good thing in a competitive business world.
A side project can be a great way to try out a new business idea and start earning from it while maintaining your current career to pay for your essential living costs.
So, what passive income will you create for yourself or your business?
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