Many of us have heard that having multiple streams of income is the key to financial success. Thanks to the IRS, it’s now common knowledge that the average millionaire has seven income streams. Financial experts, budding entrepreneurs, and bloggers have mentioned it more and more in YouTube lectures, podcasts, financial guides, and Facebook testimonies.
When I first began learning about multiple revenue sources, I was a recent college graduate still trying to hone in and secure one stream of income, let alone think about seven. (Seven?! Seven… jobs? Yikes.) Although now I understand that I assumed “income stream” meant “job.” And fortunately for all of us, that’s not the case.
“Income stream” does not exclusively equate to going into an office or workspace, having a boss, and trading your time for money. Quite literally, “income stream” is any avenue used to rake in cash. And did you know you could be earning money while you’re asleep, brushing your teeth, spending time with loved ones, enjoying a vacation, and doing the things you love most? No? Well, then it’s high time for you to learn about passive income.
What Is Passive Income?
Most people generate and focus on active income, which is the money you earn in exchange for your time. The more hours you put in, the bigger your paycheck, but you’ll spend less time pouring into your hobbies and life.
If you suddenly become gravely ill or experience a major life change like a pregnancy or loss, you could get pulled away from your job. While some jobs may cover the time you’re out, many hourly jobs don’t.
Or let’s say you get fired or need to quit your job for whatever reason. As a result, your pay stops coming to you, and now you’re wondering how you will put food on the table. A sudden loss of income could be devastating to most Americans.
Having multiple income streams can prevent you from falling on hard times because when one income stream dries up, you’ll still have others to fall on. But how can you timely manage multiple streams?
Passive incomes are earnings that you generate with little to no active involvement. If you put in an efficient amount of time, effort, creativity, and passion on the front end, you can create a sustainable system – or a few – that increases the dollar amount in your bank account without you doing so much as batting an eyelash.
Why Generate Passive Income?
Don’t you want to lead a life where you can wake up when you want and not have to worry about reporting to someone? Aside from the extension of free time, financial security, and privilege to lead the lifestyle you want, you can also use passive income to become financially independent. Gone will be the days of debt repayment.
While it may not happen overnight, earning more money, in general, will assist you in paying back debts faster. It’s also a great way to grow your savings and retirement accounts faster!
And forget about waking up when you want. How about where you want? With your newfound freedom, you can travel and explore new states and foreign countries, all while fattening your wallet. You could work from home, or you could work from the beach. Or – you could not work at all!
How Can I Generate Passive Income?
Yeah, yeah, yeah. This all sounds great – and even a bit too good to be true. Why aren’t more people on board? Well, generating passive income is not necessarily easy. And again, it’s going to take some time and effort to learn the system, invest in the best endeavors for you, and create products that’ll really sell.
Even though you may not spend eight hours a day working a 9-5, you will have to occasionally check on your projects to make sure everything is running smoothly. Your success in how much you generate is all dependent on you and your work ethic, customer service, and entrepreneurial mindset. Read our list below for a few passive income ideas.
A common source of passive income for many people is rental property. Maybe you buy a fixer-upper, maybe you buy a home that’s ready to go. Either way, you can rent out rooms or the whole house for more than the cost of the mortgage.
The number of tenants and the time each one spends on the property is entirely up to you. Many property owners opt for long-term rentals, while others choose to do short-term options like Airbnb. By hiring a property management company, you can be as uninvolved as you want.
High-Yield Savings Accounts
You can grow your money just by putting it in the bank. A high-yield savings account, sometimes referred to as a high-interest savings account, allows your money to grow by a percentage higher than a typical savings account. You can find this option at many traditional and online banks, as well as credit unions.
The best part about it is that you can withdraw money if needed, as it’s not locked like in a CD. Of course, the higher your balance, the more money you get in return.
Purchase a Billboard
This one may not seem as common or intuitive, but it has so much earning potential! Who doesn’t sometimes get distracted while driving by those big, flashy signs in the sky boasting crafty designs and catchy taglines? Billboards get noticed, and many companies dream of advertising on them.
By buying a billboard, you can rent out time and space to companies and earn money – like thousands of dollars per month!
Dropshipping is great if you’d like to sell products online but don’t have the space to store products. Through your brand, you can sell products online and let a third-party supplier ship the order to the customer. Technically speaking, you’re the middle man. With the right software, you can automate the check-out page, payment acceptance, and product delivery.
If you can create fun and attention-grabbing advertising to get eyes on your brand and curate the products you sell to fit your brand and aesthetic, customers will build loyalty and keep coming back for more. Just be sure to vet your suppliers before doing business and stay up to date with the customer service. You’d hate to get a bad rep for some other company’s failings.
Buy and Sell Domain Names
I suppose you can make money off of anything, including websites, the way of the present and future. Think of a domain name, URL, or business name that you may not have heard of before. Then go into your computer and see if there’s a website for it. No? Cha-ching! Opportunity is knocking.
If the URL is cheap, or if you can afford to buy the domain, and you think the name has the potential to grow in popularity and generate high earnings, go for it. You can later sell the domain name for a higher price to someone who wants it.
You can loan individuals money and earn monthly interest on the repayments through an installment-type loan. There are many peer-to-peer or crowd-lending websites. A popular one specific to real estate is PeerStreet. PeerStreet assists in the process by collecting monthly payments from borrowers and distributing a share to lenders.
You could always go without an established company and lend to your peers, but this may be a very risky route. Just be sure to lend to people you trust and get contracts signed in writing.
According to Investopedia, dividend income is the money shareholders get from having stock in a company. For shareholders to earn money, the company must have a profit to distribute. Of course, many companies expect a profit and often need said profit to keep the business up and running. Whatever is left over is given to shareholders. The company’s board of directors decides the amount.
Sometimes, this means hard cash. Other times, this means more stock and shares. Every party will agree to negotiated deal specifics in signed contracts. While dividend income typically comes from companies, it can also come from various mutual funds and exchange-traded funds (ETFs).
Ever wanted to be one of the sharks on Shark Tank? While you may not find yourself getting screen time on the show, you could very well play the part. As an angel investor, you exchange your money for part ownership of a company, typically startups. You’d be the person helping a startup company get off the ground and running.
Angel investors’ shares could range from a slice of ownership to well over 50%, but as a silent partner, you may not oversee daily operations or need to be in the office. Specifics all come down to whatever is in the contract. If things go well, you’ll earn a return, be able to exit the partnership with more money than you invested, and even use that money to fund the next entrepreneur’s venture.