There are many ways to build passive income. Among the most popular, historically, has been investing in a specific portfolio and letting compound interest make that money grow and buy and rent real estate.
But with the growing popularity of social media and platforms like YouTube, many content creators are learning that they can reap the benefits of passive income themselves. Some earn money by selling pre-recorded classes online, for example, others make money from podcasts and YouTube videos, while others earn money through their blog affiliates or TikTok.
Sometimes, the passive income these creative people earn is big enough to quit their day jobs altogether.
If you’re eager to start making some passive income on your own, and maybe quit your job one day, here are three tips from entrepreneurs making thousands — or even tens of thousands of dollars — in passive income per month.
Sell an existing skill to supplement your income
Graham Cochran, 38, was working as a full-time music producer trying 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 clients to his producing work. But he soon realized that both were a way to make money themselves. Today, this business earns $40,000 per 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 came up with the idea of turning my knowledge of audio mixing and recording into an online course,” he recently told CNBC Make It. Selling digital products on the basis of it “saved passive income and allowed me to make more money in a day – with less time – than I did in freelance work.”
After many years of growing his online business, Cochrane has a second line of online courses dedicated to teaching people how to monetize what they know and are passionate about. This generates $120,000 in gross sales and passive income per month.
In just a few years, he began cutting back on music production. He now only works 5 hours a week on his online business.
Rely on how others have succeeded in growing
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 the lost income. Initially, I worked about 10 hours a day as a fitness trainer. In July 2021, I started creating TikTok and Instagram videos to teach people how to build wealth and business online. She now generates around $8000 per month in passive income through affiliate marketing.
“I see a lot of people trying so hard to completely reinvent the wheel with social media posts to highlight their work,” she recently told CNBC Make It. “I’ve learned that the key to going viral and increasing your audience is to study what works for others,” she said.
Once you’ve found niche topics you want to discuss in your content, Smith recommends studying and expanding on the conversations people have around them. What questions are still being asked about 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 comments? And don’t forget to use relevant hashtags that you see pop up on your platform.
Smith no longer works as a fitness trainer and only spends two hours a day on her online business.
Diversify your sources of income to make it easier to quit smoking
33-year-old Michelle Schroeder Gardner started her blog, Making Sense of Cents, in 2011 to track the progress of paying off college loans while working full time as a financial analyst. It now generates an average of $760,000 a year in passive income from it, having expanded its coverage to include investment advice and financial products.