Passive income. Even the term itself sounds good, doesn’t it? It should, considering passive income is money that doesn’t require any direct involvement from you. It may sound like a pipe dream but depending on your personal situation and skills, you could find that using passive income as a backup or even primary source of revenue isn’t quite as unrealistic as it might appear. It’s not quite as simple as sitting back and watching the money roll in, however.
Passive income should be placed into two distinct categories. Residual income is money made over time from work done only once. The most obvious example of this is an author who writes a book and then gets paid each time the book is purchased. The book only had to be written once, but it can be sold as many times as possible.
Leveraged Income is when the work of others makes money for you. A common example of this would be a contractor who might charge a price for work and then use sub contractors to produce a profit margin. In this situation, the contractor is effectively making money for doing nothing. If you manage a team of people who can also create something that can be sold more than once, you can even combine these two forms of passive income.
If you haven’t got a team under your belt, and your quest to write the Great American Novel has thus far eluded you, what other more realistic steps can you take to increase your potential for passive income? The most important question to ask yourself when thinking about passive income isn’t how to make it from scratch – that defeats the point. It’s about finding out how your current skills and resources can be turned into cash in the long term.
One of the first major ways to earn passive income is to rent a room in your house. You need no experience to do this. This can make you a lot of money very quickly with relatively little work. In fact, it’s the number one way to make passive income. However, renting isn’t something you should jump into without giving plenty of thought to your own personal privacy. You’ll also need to be aware of rental laws in case you have a problem tenant, which happens more often than many people think.
If you haven’t got a spare room on hand, or are already renting a house yourself, you can turn to your skills for ideas. The internet has made passive income a much more viable prospect for people to engage in part time. One great way to make money through Passive Income is to set up a blog. There’s a wealth of guides available on how to do this, and if your blog becomes successful you’ll make passive income in the form of advertising revenue. Don’t be fooled by ‘get rich quick’ schemes though – running a blog takes quite a bit of time and effort at the start. Because of this, the initial set-up means it’s not quite ‘passive’ income. Still, once your blog becomes popular it may only require a minimal amount of effort to maintain.
If you’re not quite that technically minded, you can always create content for other people. Written content is quite hard to sell multiple times because of the way search engines work. Luckily, there is still a market for articles where you only sell the right to use the text, and not the sole copyright. Even better, if you’ve got a good camera and a love for photography you can sell stock photos online multiple times as images aren’t subject to quite the same rules about duplication as written content.
As you can see, passive income doesn’t just pop out of thin air. You will need to either use your resources or skills in order to set up any lasting form of income. However, if you start from scratch knowing your goals and with a clear idea of where your passive income could be generated, you are far more likely to be able to build something that will provide a continued source of revenue for years to come.