Passive income is a great way to obtain extra cash flow to supplement your needs. With passive income, you can still earn money while you maintain your primary source of income. The following are five examples of passive income streams that can help you improve your earnings and support your savings goals.
What Is Passive Income?
Passive income is earned through little to no effort from a source that differs from your regular employer or contractor. This means a passive income isn’t a day job and isn’t a second job that you do on an off day. A successful passive income can give you financial security or independence. Passive income doesn’t mean earning from doing nothing, and it’s not an installment loan. Getting a second job doesn’t mean you have passive income, as you’ll still be required to show up and work for you to get paid.
Passive Income Examples With Constant Money Streams
Passive income requires work, except once you create a passive income source, you don’t work every day or all the time. According to the IRS (Internal Revenue Service), you can earn passive income in three ways:
- Buying something that gets you income
- Creating something that generates income
- Contributing something
Buying Something
You can create passive income by buying things that either keep them or sell them to generate income. This includes income from activities and assets such as:
- Buying bonds and annuities
- Buying rental properties to earn rental income
- Buying stock to earn dividends
- Earning interest from a savings account
- Buying digital products or trading in them like cryptocurrency or NFTs to get income. For example, you can buy cryptocurrency from this site.
Creating
You can earn passive income by creating things that generate income. This includes products or services, which are physical or online. Examples of things you can create to help you earn passive income include:
- Creating mobile apps that users buy and download.
- Writing a book, novel, or e-Book, and then selling it to earn royalties. This also includes creating and selling courses online on sites like Udemy, and Coursera.
- Creating music, art, poems, or videos to sell online or earn royalties.
- Selling photography online
- Creating sponsored social media posts or influencer marketing
- Writing articles, posts, or YouTube content that earn money
Contributing
Apart from buying and creating passive income, you can undertake activities that require minimal participation, contribute to revenue generation, and earn income. Examples of these activities are:
- Renting out assets, for example, renting out your car to Uber, or for branding.
- Affiliate marketing.
- Renting out your home or room in your home, for example, making your home an AirBnB.
- Investing your money in an existing enterprise to earn part of the profit.
Some forms of passive income streams may require some form of labor or participation. Don’t just leave your passive income to grow by itself. For example, an e-Book or e-course may require marketing and updating, and cryptocurrency trading may require constant monitoring, but these aren’t activities you do every day.
Endnote
An emergency can come anytime, and you need a buffer to protect you at such challenging times. Creating passive income will help you become financially stable and protect you during financial challenges.