Financial experts share the benefits of passive income and making extra money when you’re not on-the-clock.
According to a recent survey, 96% of people are currently job hunting, in large part because they need to make more money. Unfortunately, since pay isn’t keeping up with inflation, 39% of Americans currently have a side hustle and 44% believe they’ll always need one to make ends meet.
But what if you could earn money while you sleep? Or like Dave Ramsey says, “What if you could give yourself a raise in your spare time?”
Passive Income
Enter passive income. Passive income is a type of unearned income that is acquired with minimal labor to earn or maintain. It is often combined with another source of income, such as regular employment or a side gig. For most business owners, it can be incredibly helpful to generate passive income, which is revenue that takes very little effort to acquire. Still, because owners are so busy maintaining their small businesses, most don’t pause to think of ways they can generate additional revenue streams. Older business owners also feel safety in managing retirement or investment portfolios through mutual funds, rather than diversifying their work to account for additional streams that could also account for extra money.
At a time when 73% of workers with a side hustle are actively thinking of quitting their jobs, consider whether your current job – combined with passive income – can help fund your future dreams of owning a business or building wealth.
Generating Additional Revenue Streams
“ While these ventures may require some time, energy and upfront resources they can provide provide long-term rewards without ongoing work. Think of how you get revenue from stock dividends or rent from an apartment building that you own. If you’ve invested in a company and they’re paying you back in interest, that’s another example of passive income,” explained Raj Tulshan, founder of Loan Mantra.
“There are plenty of ways to generate passive income, such as renting out a parking space, selling your photos online, investing in stocks that pay dividends and writing a blog,” Tulshan continued. “Think of it as another way to add to your financial portfolio income, work your main job, or spend time with your family and friends. It can be a relatively easy way to secure an extra cash stream to build financial security.”
Like any acquired income, passive income must be reported to the IRS for taxes.
Who Is Generating Passive Income?
According to the US Census Bureau, 20% of American households earn passive income, with the median earnings averaging $4,200 a year. Younger demographics often rely on this extra revenue stream, with estimates suggesting that approximately 36% of millennials make passive income. By geography, California and Florida residents earn the most passive income. The Hilton Head, SC area was one of the top smaller metro areas, in terms of average passive income earners, with residents earning an average of $15,000 per year in passive income.
At a time when 73% of workers with a side hustle are actively thinking of quitting their jobs, consider whether your current job – combined with passive income – can help fund your future dreams of owning a business or building wealth.
How To Generate Passive Income
There are some simple ways that you can build additional revenue streams without much effort:
Rent extra space.
Is there commercial space that is not being used in the off-hours that has the potential for duel use? If you are not excited about being the manager of rental properties on the side, considering the property you already use. This could be a gymnastics gym that hosts birthday parties, or a business office that sells premium parking on weekends when staff are at home, and particularly during high-traffic concerts or events. Using your property to derive a passive income during its “off-hours” is a great way to earn extra money.
Create an online course or e-book.
Platforms like Udemy and 360Learning can be used to sell your content to third parties. Spotlight your business acumen by designing and selling courses based on your industry knowledge. While developing an online course often requires significant upfront work, if your course content resonates for the long-term, it can earn you passive income for years to come. On the other hand, e-books don’t need to be long, and they can be quite inexpensive to create and distribute. If you write an e-book, you can enter into global distribution opportunities, which can increase passive revenue.
Invest in real estate.
Investing in real estate either alone or with business partners can be a smart way to earn passive income and generate financial freedom. Consider different property types and determine the best return on opportunities in your area. Research current market conditions to determine when (and where) to buy. And it never hurts to network with people that are privy to city development plans and infrastructure grants.
Sell stock photos or artwork.
Create digital downloads of your artwork or photos via online marketplaces like Etsy. Shutterbugs can also earn royalties by selling original photographs to create digital products for stock photo websites like Shutterstock or Adobe Stock. This method can help provide passive income coming in every time someone buys your photos or artwork online.
Purchase vending machines.
Buying and placing vending machines in strategic, high-traffic locations, such as airports, train or bus stations, office buildings, shopping plazas, and schools can have a return. The vending machine industry generated more than $19.8 billion in 2023, and is estimated to reach $37.95 billion by 2032. One well-trafficked vending machine can bring in hundreds of dollars in profit per month, so you can earn passive income as customers snack from your machine.
Invest in another business.
When you provide capital for a business, you can earn a share of the profits – even if you’re a silent, hands-off partner. Be sure to research the opportunity carefully and put your money into a company that you truly believe in, with leaders that you’re confident will run a successful, profitable venture.
Shine online.
If you have a large following on social media, use that influence to share and recommend products to others. This can also be done by monetizing your blog by becoming an affiliate. You can earn commission every time someone purchases the product from an affiliate link on your channels. Again, this may take some time and effort to set up, but can pay off down the line. The more followers you have, the more money you can (potentially) make.
“This idea list is just the tip of the iceberg. Tap into your talents and creativity. Think of ways passive income can build up your portfolio income so you can have additional streams of revenue coming in while you’re busy doing other things,” Tulshan said. “Earning passive income can be a really effective way of generating additional revenue to build up your savings, start a new business or fund another dream to become more financially secure.”
About Loan Mantra
Loan Mantra is a one-stop FinTech business portal that democratizes the loan process by providing corporate sized services and access to new entrepreneurs, small and medium sized businesses.
As a minority-owned business, Loan Mantra also understands the challenges facing underserved borrowers. Our mantra? To improve the future of human entrepreneurship through best-in-class technology, financial literacy, and commitment to equitable market access. Reach out today at www.loanmantra.com.