One of the best ways to build wealth without eating up your time is through generating passive income.
This new financial trend has been helping many people increase their financial freedom, especially during the COVID-19 pandemic, when we have all had more time at home to think about long-term goals. So, what is passive income and how could it impact your life? Read on to find out the ins and outs of generating income in a hands-off fashion.
What is passive income?
Passive income is money earned through any venture that requires little daily effort or upkeep on the individual’s part. Some people have likened it to earning money in your sleep.
What it is not
The best way to describe passive income is to describe what it is not first. It is not your job, investing, or any side hustles you have. The whole idea of passive income is to supplement those parts of your cashflow. Any activity that requires you to put in daily work or maintenance is a form of active income, such as a nine-to-five job.
What it is
Good examples of passive income include managing a blog, teaching online courses, writing books, and launching programs.
How can you start to generate passive income?
If you think you can put in the work, and you can use the supplemental income, then you should consider starting your passive income stream! Here are the steps you need to take to see profit. But remember that this venture will take time to see results. It’s not an overnight get-rich-quick scheme. This is a way to build wealth sustainably.
The first step is to consider your skills, talents, and passions. Ask yourself the following questions:
- Is there a market for this? If so, what is my target audience?
- What can I offer people?
- What problem am I solving?
- Have other people done this before? (if so, look through their work to research and modify yours to make it your own.)
- How will I sell this?
Initial time and effort
Your most precious and limited resource is your time. Most people think their best asset is something monetary, but your time and skills are worth their weight in gold. Passive income ventures require a great deal of initial time and effort into building the system that will eventually earn you a steady stream of hands-off revenue. Use this checklist to get started.
- Research your market.
- Build a website or interface where customers will purchase and access your goods or services. (This may require a monetary investment, so be sure to make it high-quality and worth the money.)
- Write, record, and design your product.
- Have an expert or loved one review your work and give feedback.
- Publish and advertise. You should consider using social media and paying for a few initial ads.
Stream of income monitoring
Monitor your stream of income by making realistic goals and analyzing where you could improve your product to see more return. Every month, sit down and look through what you spent against what you made. A successful passive income venture will look different to everyone, so it’s important to define what success will look like for you. There is no universal average for the amount of passive income you can make because everyone’s product will perform differently. What matters is that it feels worth it to you and that you see satisfying numbers.
However, you can always strive to make more through continuing your education so you can improve what you’re selling. Websites like SkillShare make it easy to learn more about marketing a product and your subject of interest so you can run your stream of income in the best way possible.
Passive income requires initial work, but if you stick with it, you can set yourself up for a successful supplemental income stream that can turn into dream vacations, home upgrades, and beyond.