Hard work pays off — especially when you get a raise or a well-earned promotion. But taking the next step in your career isn’t the only way to
make money.
Whether you’re looking to supplement your salary or earn enough to leave the workforce altogether, passive income might be the key to making a big change. Our beginner’s guide is here to help.
What is passive income?
Unlike active income, where you directly trade your time for a paycheck,
passive income lets your money work for you over time. Whether you’re getting monthly payments from a rental property or earning royalties from a book you published years ago, a good passive income stream keeps flowing without any more work.
What passive income
isn’t is a
second job, even if you use it to
supplement your main gig. And if you buy an asset that doesn’t generate revenue — say, a vacant property that you choose not to rent out — that asset also wouldn’t be considered a passive income source.
Learning how to make passive income can transform your financial future, helping you earn more money without putting in a lot of extra work.
12 passive income ideas for beginners
Looking for passive income ideas to help you pad your savings account? From real estate to stock photography to selling your knowledge online, here are 12 ingenious ways to create your first passive income stream.
1. Write and sell an eBook
If you have a way with words, publishing an eBook is a great way to generate passive income. Whether it’s fiction, nonfiction, or even a graphic novel, self-publishing will get your book in front of readers faster than print. Once you’ve uploaded your eBook to a platform like Amazon Kindle, you have the potential to earn passive income indefinitely in the form of royalties.
2. Create and sell an online course
Wondering how to make passive income online? If you have knowledge or skills other people would pay to learn, consider designing online courses for self-learners. You can present the information in videos, articles, or a combination. Then, use a platform like Udemy to sell your online course to students worldwide and turn your knowledge into a digital product that earns a steady passive income stream.
3. Sell printables or stock photography online
If visual art is more your style, you can make passive income selling downloadable prints or stock photos online. eCommerce platforms like Etsy or Shutterstock make it easy to set up shop. Once you get your images listed, the website you partner with will handle the rest while you earn profit when your digital product sells.
4. Explore peer-to-peer lending
If you have a little extra money in your savings account, try playing banker for a day (or longer) through peer-to-peer lending. With a platform like LendingClub, you can lend money directly to individuals or small businesses in exchange for interest payments — a great way to earn passive income without putting in a lot of upfront work.
5. Invest in crowdfunded real estate with REITs
Don’t have enough savings to buy a rental property just yet? Try pooling your money with other investors like you! Real estate investment trusts (REITs) let you invest in real estate without owning the property directly, helping you earn dividends or a share of the rental income.
6. Invest in the stock market
The stock market is one of the most classic passive income sources. If you’re
new to investing, an app like Robinhood or Vanguard makes it easy to create a regular passive income out of dividend stocks.
7. Set up an annuity
Insurance companies sell financial products called annuities, which can start earning you a steady income now or at a set time in the future. While this option does require an upfront investment, annuities are a low-maintenance way to generate passive income during retirement.
8. Buy and hold revenue-generating websites
Use a platform like Flippa to find
websites that bring in consistent revenue through ads or affiliate marketing. Once you’ve closed the deal, let the website run with minimal updates so you can enjoy the passive income created by people visiting the site.
9. Start a TikTok or YouTube channel
Several of our passive income ideas require a small investment upfront. But if you’re wondering how to generate passive income with no initial funds,
platforms like TikTok or YouTube are a great place to start — all you need is a smartphone, an internet connection, and creative video content ideas. Once you build an audience, you can monetize your channel through ads or sponsorships. It’s then up to you if you want to keep adding more content or let your monetized videos make you money while you sleep.
10. Try affiliate marketing
Affiliate marketers earn money by promoting products or services through a blog, social media, or other online channels. As with YouTube, you’ll need to put in the work to create content and build an audience. But if your content stays relevant enough to keep driving traffic to your page, the commissions you earn after the work is done can make a great passive income stream.
11. Rent out properties on Airbnb
Turn your home or rental property into a passive income source by listing it on a short-term rental platform like Airbnb. With tools like smart locks for self-checkins and cleaning services for turnovers, you can automate much of the process, helping you make money without taking on a bunch of extra work.
12. Open a high-yield savings account
On its own, a
high-yield savings account (HYSA) isn’t a very lucrative form of passive income. But since a HYSA account typically has much a higher interest rate than traditional savings, it’s a smart place to park extra money that you’re not ready to sink into passive income investments.
How to choose the best passive income source for you
Whether it’s dividend stocks, REITs, peer-to-peer lending, or digital products, the best way to earn passive income is the way that works for you — and what works will look different for everyone.
Here are some tips for finding the right passive income source for your unique situation.
Consider your skills and resources. If you’re a writer, try the eBook route. Smart with finance? Investing could be the path for you. The important thing is that you pick a passive income idea that aligns with your expertise or resources.
Think about time commitments. Writing a book or producing a bunch of art prints will require a decent amount of work upfront. If you’re short on spare time but have some capital, investing in a rental property, REIT, or dividend stocks might be the smartest choice.
Determine your financial goals. Are you trying to supplement your salary or replace it entirely? Answer this question honestly so you can make a passive income investment that will realistically get you to your financial goals.
Diversify your passive income sources. You don’t have to put all your eggs in one basket. You could invest in stocks, create digital products, and rent out property all at the same time. Diversification will help you reduce risk and keep your passive income steady even if one source underperforms.
Smart small. Don’t try to take on too many passive income projects at once. Experiment with one or two ideas and wait to see how they do before scaling up.
Jumpstart your journey to financial momentum
Our
Cash Out tool lets you access your pay as you work—
up to $150/ day with a max of $750 between paydays.
Whether you need to cover unexpected expenses or need to access a portion of your earnings before payday for a passive income investment opportunity that just popped up,
EarnIn makes it possible with Cash Out.
Download EarnIn to give yourself some extra cushion while creating your passive income stream.
Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.
EarnIn is a financial technology company, not a bank. Banking services are provided by our bank partners on certain products other than Cash Out. A pay period is the time between your paychecks, such as weekly, biweekly, or monthly. EarnIn determines your daily and pay period limits (“Daily Max” and “Pay Period Max”) based on your income and financial risk factors as outlined in the
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