When it comes to monthly income, few things are as appealing as passive income. Passive income is a revenue stream that doesn’t come from an employer or a contractor. In most cases, passive income involves putting in a bit of work on the front end, which generates a reliable or semi-reliable extra income with minimal effort after that. In short, it’s a way to earn money that doesn’t interfere with your day-to-day routine.
Passive income is a great way to increase your monthly budget, pay off debts, or set aside extra money for saving or investing.
Interested in generating passive income? Here are a few ideas.
High-interest savings accounts or CDs
One of the simplest ways to generate passive income is to invest the money you have in a high-yield savings account. That way, your money makes more money while just sitting there. Look for accounts that earn between three and five percent interest with no minimum balance or monthly fees.
A CD — or a certificate of deposit — also uses your money to make money. With a CD, you can’t access the funds for a designated amount of time (think three, six, 12 or 18 months). But while it’s in the CD, your money will earn a high fixed interest rate of around five percent. Keep in mind that there are penalties for withdrawing from your CD before the end of your designated term.
Rent out a room — or your entire home
Have an extra room in your home or apartment? Consider renting it. Whether you find a tenant for a short-term or year-long lease, rental income is one of the top ways to generate passive income. You meet the terms of your rental agreement, and that monthly fee can help pay your rent or mortgage, or be invested in other accounts.
Additionally, if you’re traveling, renting your home or apartment through Airbnb or another short-term rental site can earn you extra money while you’re away. You’ll have to set up the listing and communicate with renters, but while you’re gone you can earn a chunk of income — and maybe even use some to send to your loved ones abroad.
Rent out a parking space — or even your car
If you live in a big city and have a parking space that you’re not using, you could be sitting on a gold mine, as many people will pay a few hundred dollars a month for a reliable parking spot. You can also earn money by renting out your car. Sites like Turo work like an Airbnb for automobiles, allowing travelers to access short-term transportation without the fuss of a rental company. Keep in mind that renters are usually looking for cars in great condition. But if you’re someone who takes pride in your car — this could be for you.
Create a blog or YouTube channel
If you have a desirable skill set, a unique voice, an interesting point of view, or other knowledge worth sharing, you can generate passive income through a blog or YouTube channel. While it starts slow, once you start to generate an audience, you can sell ad space on your blog or channel and earn money for every person who visits or views your work. Keep in mind that earning big bucks through these outlets — especially YouTube — necessitates consistent new content, so it’s a more labor-intensive way to earn passive income. But if you enjoy writing or creating videos, this could be for you.
Affiliate marketing
Finding advertisers for your blog or web channel is also known as affiliate marketing, and if you have any sort of website for a business or service, affiliate marketing can earn you passive income as well. Affiliate marketing involves promoting another company’s products or services on your website, then earning a commission for every sale, registration or visitor (depending on the agreement). Amazon Associates, Click Bank, Rakuten, eBay Partner Network and other sites set up the advertisements, so you earn extra money while running your business.
Use your creative talents
If you’re a photographer or a musician, your creations can generate a passive income stream. You can license your songs to sites like AudioJungle, where podcasters, directors and other content creators can buy them to use for their projects. Similarly, if you have an eye for photography, you can license your photography to sites like Adobe Stock, where bloggers, editorial or commercial publications and other creatives can buy them to use in their publications.
DISCLAIMER – This content is for informational purposes only. Pangea and its affiliates do not provide financial, legal, investment or tax advice.