Picture it, you’re sitting on a beach, drinking a mai tai, and… BOOM, suddenly you see a deposit of money into your bank account. How did this happen? Well, through passive income of course!
If you’re like many people out there, you’ve probably heard the term “passive income” but you might be thinking to yourself: what is passive income, why is passive income so popular, and how can I make passive income? If this sounds familiar then read on.
Passive Income 101
Passive income is the ability to receive money without actively working. In essence, it’s the opposite of trading time for money. Trading time for money, for example, would be charging an hourly rate for your services. If you are a massage therapist and you charge a client $50 for an hour massage, you just traded your time and service for money. This is considered Active Income.
However, if you hired a massage therapist as your employee, had them perform the massage, and you received the revenue, THAT would be passive income.
Basically, when you get paid without having to expend any energy, you know you’ve made passive income! Sounds pretty good right?
Why is passive income so popular?
So why has the term “Passive Income” exploded in popularity lately? The main reason it’s become so popular is because after the pandemic, many people woke up to the realization that if they lose their job, they would lose 100% of their income! And given what happened in March of 2020, many people decided that they didn’t want to rely entirely on their employer for income, it was just too risky.
In fact, having a 9-5 job isn’t “safe” anymore. Layoffs, consolidations, technology changes – all of these create an environment where most people don’t work at the same company for 20-30 years. So if you are in the same boat, you may also be feeling the pressure to have some additional sources of income OUTSIDE of your job.
Passive income examples
I’m sure Passive Income is sounding pretty good, right? Well, before you drop everything and just run out to get passive income, keep in mind that Passive Income does not mean passive investment. Wait, say what? Okay — let me break it down.
Passive income means that you’re receiving money without working. However, most of the time, creating a stream of passive income requires ENERGY to create (aka. time, money, physical energy). Most passive income ideas or opportunities require an upfront investment of either time or money. Let’s walk through some examples.
Passive Income Example #1:
Let’s say you wanted to buy a duplex property. You could purchase this property, rent out the two units, and receive rental income. You are then receiving income each month (rental income) without having to put any “work” in. However, while that IS passive income, in this scenario it would require you to purchase the property which would require an upfront investment in time to find the property, and money to purchase the property.
Passive Income Example #2:
In this scenario, let’s say you didn’t have money to invest in buying a house. Instead, you can create an online course (or write a book) to teach a valuable skill set or piece of knowledge. You can create the online course through Videos, PDFs, etc. It would require an upfront commitment of your TIME (research, creating outlines, recording videos) plus you’d need to tell people about your offer (build up your online audience, etc.). So while it wouldn’t require any upfront MONEY, it would require time.
6 Passive Income Ideas
So, how can you make passive income? Before I dig into some options, I want to make a quick point to help you on your journey.
Keep in mind: If you want passive income so that you can achieve financial freedom, you can also achieve financial freedom through saving / investing in the stock market (or other assets). You don’t NEED passive income specifically to become financially free.
Related: Top 12 Best Finance Books For Millennial Beginners
Now that we’re past that, let’s talk about you can create passive income.
Passive Income Ideas:
- Purchase a house, duplex, triplex, or apartment complex and rent out the units for long-term rentals
- Purchase a property in a popular destination area, and list the property on Airbnb or VRBO
- If you LIVE in a nice area, potentially create an ADU (Additional Dwelling Unit) – meaning, a separate area on your property, and rent out that room!
- Set up an Amazon Sales Shop – Link up your favorite purchases to your amazon shop, and anytime anyone buys a recommendation, you’ll get a kick back credit
- If you don’t use your car often, download and Rent out your car on the app Turo
- Create and sell an e-book or online course
As you can see, there are a LOT of ways to generate Passive Income! Now before you go off and just dive straight in, I want you to ask yourself a few questions:
- Why do I want passive income?
- What will passive income do for me?
- How much passive income do I want each month?
- Do I actually want passive income, or would I rather just invest in the stock market?
Then, I want you to think about what you’re willing to invest – Time, or Money? Investing money would be a good option if you currently are able to save money, or have money saved, and you want to use this money to BUY a passive income stream.
If you don’t have as much money saved up, or are struggling to save money, it may be a better option for you to create passive income through your TIME. Meaning, you create an online course, setup an Amazon online shop, or start working with a multi-level marketing company.
Learning how to create passive income
I love talking about passive income, and could talk about it for days! If you’ve enjoyed this and want to dig deeper, grab my ultra popular FREE Masterclass Passive Income 101!
This masterclass will help you understand the basics of passive income, plus provide you the EXACT step by step guide I used to buy my first investment property! You can also follow along on Instagram @scottietaylorjr where I post helpful tips & ideas daily!
To your massive success,
Scottie
Scottie is a money and business coach and financial advisor. He teaches all things money, including the basics of money manifestation, improving your money mindset (like helping remove limiting beliefs) and how to work less and make more through scaling and passive income. Scottie is a big tennis/soccer fan, loves the beach and is a single dad to his doghter, Cashew.
