Best Ways to Make Passive Income

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Passive income is a bit of a misnomer because you do have to put in work to generate the money. It's just more upfront, possibly one-time-only money. Passive income just means getting paid over and over again for something you do once.

Learning how to make passive income can change your entire financial life. If your money can make more money without you, it opens up a whole new world of opportunities for you. You can spend less time working and more time doing whatever you want. So, if that means making even more money, great. Or if it means more time reading, also great!

If you're curious about how to make passive income, here are four ways you may be able to get started with it.

Four Ways to Make Passive Income

For these ideas, we'll assume your goal is to make an additional $10,000 a year with passive income. As you get a handle on the income stream you've chosen, you can easily ratchet up how much you earn to well over $10,000 a year.

1. Sell Something Online

Selling digital products online is a great way to make passive income. You can sell e-books, courses, prints, or audio files.

The internet has democratized education. Someone out there is looking to learn a skill that you specifically can teach. Think about what your skills and interests are. Can you package some of those things into a book and sell it for $15 online?

Say you're a woodworker who has been creating original pieces for 10 years. You could write a step-by-step guide on how to source wood, use the tools you love the most and where to find them, and common wood restoration practices that new woodworkers should know. Putting this all together takes time upfront, but then you can sell it online forever.

To earn $10,000, an e-book at $15 each would need to sell 667 copies. If you turned it into a visual and audio course and sold it for $150, you would need to sell just 67 copies to earn $10,000. Since you can reach far and wide with the internet, selling products online is a popular passive income idea.

2. Accrue Dividend Payments

Dividends are payments some companies pay to their investors. If you have enough money in dividend-producing investments, you could potentially live off of the dividend earnings alone.

Different companies pay dividends on different timelines. Some pay monthly, some quarterly and some annually. You can reinvest your dividends while you're in the “wealth accumulation” phase, while you build to a point where the dividends are big enough to live off of.

But once you reach that point, dividends are a completely passive way of earning income.

3. Rent Out Your Property

We're using the word “property” in the broadest sense of the word here. It's not just about renting out your real estate property. In the sharing economy, you can rent out your car, your house, your bike, or even your parking spot.

Take a look around your house and life. Do you have things you don't use on a regular basis? Someone else may want to pay good money to use it.

Perhaps you work from home and rarely drive your car. You can try using services like Turo or RelayRide to rent out your car when you're not using it. You can be sitting at home working while someone pays you to drive your car around.

Renting out your home to long-term renters or on Airbnb is probably one of the most popular ways to make passive income right now. You can charge for these services, and the demand is pretty constant. If you are not the property owner, make sure you check your lease before renting out a room, to make sure you're not in violation of anything.

Renting out your car for $45 per day means you'd have to rent it out for 223 days a year to make $10,000.

4. Get Paid to Do Things You Already Do

You can get paid to play video games, to shop or to find job listings. Jobspotter is an app that will pay you to take pictures of “for hire” signs. That means you can get paid while you're running the errands you have to run anyway.

Creating a YouTube video that earns ad revenue each month is an example of a source of passive income. You had to write the script, film the video, edit it and upload it to Youtube, which was all work. But from there on out, all you have to do is collect the money from the ads the video displays.

There are a lot of businesses that will pay you to do things like this. You're doing leg work for them, so they pay you. But you're also just living your life, which you were going to do anyway. So the earnings become passive.

Final Thoughts

Passive income is something that most, if not all, people should be pursuing. It could mean the difference between financial stress and financial stability. Or it could mean the difference between financial stability and financial flexibility.

Earning money without having to exchange your time for it is also a way to take back control of your time and life. If your money can do the work without you, what can you do with that time? Maybe the next great American novel is in your head. Passive income could be the key to having the time to sit down and write it. Or maybe it means more time with family, more time gardening, or more time to volunteer for causes dear to your heart.

These are just some ways to earn passive income to whet your appetite. The best passive income idea is the one that you will actually put the time in to create and that fits in your life.

Kara Perez

Kara Perez is a freelance personal finance writer. She is the founder of, a company that connects women and money. Kara lives in Austin, TX and believes in the power of budgeting and peanut butter.

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