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Passive Income: What is it and how do I make it work?

Passive income is money earned in a way that doesn’t require much effort. Simply put, it’s income that comes from income-generating assets.

Passive income is great because it allows you to earn extra money without spending loads of time working for it. It can provide more financial security and stability because it creates additional streams of money that are not solely dependent on a traditional job. Passive income allows for more flexibility in your financial life, giving U the opportunity to pursue your passions, spend time with loved ones, and perhaps even enjoy a greater work-life balance. Additionally, passive income can contribute to long-term wealth building and the potential to achieve financial independence and retire early!

WHAT EXACTLY IS ‘PASSIVE INCOME’?

Passive income is income you earn from something you own, rather than an employer or a contractor. It can be generated by earning interest on savings, renting out a space, purchasing dividend-paying stocks, even getting cash back or rewards on a credit card, and so on. Passive income is having something, like a property, or a business, or an investment, or a rewards card, that makes money for you, without you having to work actively. It’s a way to earn money even when you’re not directly doing anything.

For example, imagine you have a lemonade stand. When you sell lemonade, you have to work at setting up the stand and then make the lemonade yourself. That’s called active income because you need to do stuff to earn money.

Now, let’s say you have a magic lemonade stand — Piertotum Locomotor! It can make and sell lemonade all on its own without you having to do anything. Even if you’re playing at the park or sleeping, the lemonade stand keeps making money for you. That’s passive income!

PASSIVE INCOME IDEAS

Some examples of passive income could be owning rental properties where people pay you rent, or creating a book or a song that keeps earning money every time someone buys it. It’s a little money-making machine that works on its own. Here are some simple ways to earn money without working too much:

  1. Rent out a property: If you have an extra house or apartment, or even an extra room or a parking spot, you can rent out that space, as a short term or long term rental and earn passive income from those rentals. If you live near a high traffic area (a stadium, shopping location. restaurant, etc.) and have a spot or two that people can park in, you could even charge an hourly parking rate!
  2. Save money: U might be thinking, wait — I can save money AND earn money? Yes U can! UMe has some pretty fantastic savings options like Certificates of Deposit (CDs) and Money Market accounts. This is an easy option and it’s like getting a little bonus for being smart with your money.
  3. Sell Things Online: If you have cool things to sell, do it online!
    • U can make an online store on platforms like Etsy where people buy fun custom-made goods or collectable items. With the right setup, your store can work by itself, and you’ll make money even when you’re not actively selling.
    • U can also try affiliate marketing: If you have a website or a social media account, you can share links to products that you like. When someone buys through your link, you get a small commission.
    • If you write books, compose music, or make software, you can sell them and earn money whenever someone buys them. Get paid for your creativity!
  1. Rent Out Your Stuff: If you have things like a bike, camera, or toys that you don’t always use, you can let other people borrow them and charge them a small fee. It’s like running a mini rental business.
  2. Teach What You Know: If you’re good at something, like playing an instrument or drawing, you can create online courses to teach others. When people enroll in your courses, you make money. It’s like being a teacher and sharing your skills. Pro Tip: U can make video lessons and host them online, and people can purchase access to them 24/7, even while you’re sleeping!

Just remember, creating passive income usually takes some work at first, like setting up an Etsy store, creating video tutorials, or writing a book. It’s important to learn more about these ideas, so do your research! But once you’re set up, U can keep earning money with less effort.

Having passive income streams is like having extra money that comes in without having to work for it all the time. It gives you more security because you can have different sources of earnings. It can also give you more freedom to do things you love, and to spend time with your family and friends. Plus, it can help you save and build wealth for the future!

Want to learn more about our Certificates of Deposit (CD) and Money Market accounts? Give us a call or email today! We’re here to help U make the most of your finances in a safe, steady way because U matter to Me, to all of us, at UMe.

Disclaimer: U matter to Me (all of us) at UMe — and that’s why we do our best to deliver helpful information on our blog. Please note the following: (1) UMe Credit Union works hard to make certain that the information we post here is as accurate as humanly possible. But as you know, information can change and evolve quickly. While we try to update the blog on a regular basis, the content of some older posts may not be correct or up-to-date. (2) Some destinations on the World Wide Web that we link you to will exist on external websites. UMe Credit Union does not officially endorse any connected sites, nor do/did we compensate or get compensated by any entities to be featured in our posts (unless otherwise noted). (3) Everyone’s situation is unique and we advise you to consult with our personal bankers or your finance, tax, or legal professional for advice individualized to you!