How to Earn Passive Income, According to 3 Experts
There are many ways to build passive income. Some of the most popular, historically, are investing in a given portfolio and letting compound interest grow that money and buying and renting properties.
But as social media and platforms like YouTube grow in popularity, many content creators are learning that they can take advantage of passive income themselves. Some make money by selling pre-recorded courses online, for example, others earn advertising revenue on their podcasts and YouTube videos, and others make money through affiliates from their blogs or TikTok.
Sometimes, the passive income generated by these creators is large enough that they quit their day jobs altogether.
If you want to start making passive income yourself and maybe even quit your job one day, here are three tips from entrepreneurs who are making thousands, if not tens of thousands, of dollars in passive income a month.
Sell an existing skill to supplement your income
Graham Cochrane, 38, was working as a full-time music producer to make ends meet when he started his blog and YouTube channel, The Recording Revolution. Initially, the idea was to share his knowledge of music and attract more customers to his production business. But he soon realized that both were vehicles for making money themselves. Today, this business brings in $40,000 a month in passive income.
When it comes to starting your own passive income stream, Cochrane recommends building on the skills and knowledge you already have.
“The turning point for me was when I had the idea of turning my knowledge of audio mixing and recording into an online course.” he recently told CNBC Make It. Selling digital products based on this “provided a passive income stream and allowed me to make a lot more money in a day – while taking less time – than when I was working as a freelancer”.
After many years of building its online business, Cochrane has a second online course business dedicated to teaching people how to monetize what they know and what they are passionate about. This brings in $120,000 in gross sales and passive income per month.
Within just a few years, he began to scale back his musical output. He now only works 5 hours a week on his online business.
Look at how others have found success to grow
Shannon Smith, 24, was laid off from her job as a waitress at the start of the pandemic and has spent months trying to figure out how to make up for lost income. At first, she worked about 10 hours a day as a fitness coach. In July 2021, she started making TikTok and Instagram videos teaching people how to build wealth and businesses online. She now earns around $8,000 a month in passive income from affiliate marketing.
“I see a lot of people trying to completely reinvent the wheel with social media posts to put their business in the spotlight,” she recently told CNBC Make It. But “I’ve learned that the key to going viral and growing your following is to study what works for others,” she said.
Once you find the niche topics you want to discuss in your content, Smith recommends studying the conversations people are having around them and expanding on them. What questions keep coming up around them? She also recommends paying attention to what your successful competitors are doing with their content. Are they talking to the camera? Do you use long captions? And don’t forget to use relevant hashtags that you see popping up on your platform.
Smith no longer works as a fitness instructor and only devotes two hours a day to his online business.
Diversify your sources of income to make quitting easier
Michelle Schroeder-Gardner, 33, started her blog, Making Sense of Cents, in 2011 to track her college loan repayment progress while working full time as a financial analyst. She now earns an average of $760,000 a year in passive income from it, after expanding her coverage to include advice on investments and financial products.