Passive income is a huge buzzword but a lot of people mistake this as making money for nothing in return. That’s just not how it works.
If you’re here looking to get rich overnight then this is not the right article for you!
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Active Income versus Passive Income
- Active income is something that you earn from a regular job.
- Passive income doesn’t stop working for you if you stop working.
Let’s say if I shut up my shop and stop working tomorrow, I would still be making most of these income streams. Considering they might not grow as fast as when I’m actively working on them but they still make money month after month. This is the beauty of passive income.
Income = Value Creation
Do not mistake passive income as free money or money that you get for nothing in exchange. Any kind of income that you can create in the world comes down to the value that you provide in exchange for it.
You either provide value in terms of the time that you can invest into creating that income stream or you provide value in terms of the money that you invest to create that income stream.
Why passive income?
I’ve been consistently working towards passive income in the last two and a half years. The reason why I’ve been doing this is that I can have more freedom over my life and I don’t have to be stuck in a rat race forever.
So, here are the 3 PASSIVE INCOME STREAMS that make me $4200+ a month, what I did to build them including tips on how to get started!
#1 Passive Income Stream – Blogging Ad Revenue
The first income stream is my blogging ad revenue. I’ve had a lifestyle blog since the summer of 2018 which is a little over 2 years. But it took me about nine months, in the beginning, to make it consistently earn some income. The main reason is that I didn’t know how to get more people to read my blog, how to drive traffic, and how to convert those visitors into customers.
I’ve tried various monetization methods to make money with my blog but by far my favorite and the most passive way of making money is definitely through ads. As long as I have people visiting my blog and traffic coming to my blog, I continue to make money on pretty much every visit on my blog.
It is the cheapest of the three income streams that I’m sharing with you here. You can start with as little as $100 a year and this only goes towards hosting your blog or your domain.
3 ways to create passive income from your blog
- Self-hosted domain
A self-hosted domain so that you’re able to monetize that blog with ads.
You can get 60% off your hosting plan with my link here.
- Qualifying traffic
Qualifying traffic from a particular traffic source. You could drive traffic to your blog from YouTube, Google, or Pinterest.
Triple your traffic & sales from Pinterest. Check out more on my free Pinterest Masterclass.
- Ad network
Ad network comes into play once you build up around 10,000 page views a month. You could start with Google Adsense and then move on to more premium ad networks like Mediavine, AdThrive, etc.
The company that I’ve been working with is Mediavine and even though my ad revenue has gone down by 50% last year because I do have a lot of posts related to travel.
As we all know, the travel category has pretty much disappeared since the start of 2020. Despite the hiccups, I’ve been consistently able to make $600 a month on my blog without having to work actively on it anymore.
How long does it take to start making money blogging?
In my case, it took me around 8-9 months until I started to generate a regular income but it can be quicker for you if you’re able to figure out a traffic source that works for you much faster.
Blogging can be a great passive income idea for you if you are someone who is low on funds and wants to have as cheap startup costs as possible. Also, if you’re someone who likes to write and you can wait 1-2 years to consistently start making money from this income stream.
#2 Passive Income Stream – YouTube Ads
The second passive income stream that I have is from YouTube ads. I started my YouTube channel in January 2020`and it took me about 10 months to get monetized. This implies that I was able to join the YouTube partner program and they started to run ads on my channel with Google Adsense.
In January 2021, my YouTube channel made $623 just from YouTube ads. In principle, YouTube ads work very similar to blog ads which means that the more traffic and views your channel gets the more money you’re able to make with your ads.
YouTube Ads versus Blogging Ads
The biggest advantage is that YouTube in and of itself is a search engine. You don’t have to spend time driving traffic to your videos. YouTube does it for you. You don’t have to spend time working on developing traffic sources like you would have to do for a blog. This is a huge advantage if you’re someone who is looking to also make passive income through ads but you don’t want to spend time actively working towards traffic.
How much do you need to spend to start a YouTube channel? It is a little bit more expensive than starting a blog. In my case, I invested in a good camera, mic, and tripod which set me back around $800. But you don’t need to invest in equipment right away at the beginning. You can just get started with your phone camera and use the inbuilt mic to start creating videos. Once you start making money from your channel, you can then reinvest that into getting better equipment.
Photo by Mateus Campos Felipe on Unsplash
How much can you make with YouTube ads?
It depends on the niche that your channel is in. Some niches do better than other niches. So, do that research before you consider starting a channel. Besides, it also depends on where you’re based in the world and where your audience is based. If your audience is based in higher-income countries, you can make more money on ads compared to if your audience is based in lower-income countries.
Why YouTube ads?
I love YouTube as a passive income source because you tend to make money on older videos as well. Once your channel is monetized, all of your videos irrespective of when you created them will continue to make money for you as long as people are watching them. Even if I stop creating videos for the next 2 months, I would still be making money on my old videos as they continue to gain more views and traffic.
A YouTube channel is the right fit for you if you have a little bit more budget to startup, you don’t want to be chasing traffic and you want to leverage the search engine power of YouTube itself. As well as the fact that you are comfortable on video or you’re willing to learn what it takes to be comfortable on video. You can also be someone like me who has a blog and a YouTube channel and you can combine the two passive income sources to make more money than just with one source.
#3 Passive Income Stream – Own Products
The third and the largest passive income stream for me is my own products. This is an income stream that I’ve been consistently building for the last year and is by far the hardest income stream out of the three but it’s also the most scalable.
When it comes to making money through blogging ads or YouTube ads you have to share a large portion of the revenue with the network that you’re working with. But when it comes to your own paid products your profit margins can be as high as 90% or 95% especially depending on the type of products that you create.
I like creating digital products over physical products because I don’t need to invest a lot upfront into manufacturing the product, having a warehouse, or some kind of inventory stock that I need to maintain consistency. I can sell as many units of my digital products as I want every single day and I can do that over and over again. The only major cost that I incur besides the time I spend to create these products is the software that I use for delivering these products such as my courses and templates.
How does it work?
I first created and sold a product about a year ago. In the beginning, my sales were really slow because my audience was small. However, since then I’ve been able to automate and scale the digital products to the point where I don’t need to actively work for them to sell. Everything from the sales page to the checkout to the delivery of the final product is pretty much automated at this point.
The only place where I come in is in terms of customer support or when people need direct feedback from me on something. This means that I don’t have to do anything to be selling these products consistently and they pretty much sell on autopilot as long as there are visitors that are coming in to check out these products.
The biggest thing that you need to create this passive income is an audience. By an audience, I don’t necessarily mean followers or subscribers but I’m referring to an email list of people that trust you and interested in your content. You can either build your own audience and email list or you can leverage the audience of some other platform such as Etsy or Amazon to sell your products.
I sell my products in two different places.
- Directly on my business website – digitalempires.co
- With a partner website – This acts as an affiliate for one of my products. Each time they make a sale they get a little commission for selling that product and I pocket the rest of it.
The second thing that you need to create this passive income is an actual product. You could create a physical product and sell it on Amazon or your website. Else, you could create digital products. Firstly I’m very biased towards digital products because I don’t have to consistently have costs of operations as well as maintenance and I can pretty much automate them from end to end.
Photo by Nick Morrison on Unsplash
People think that you need a lot of products to create any substantial amount of passive income. But here’s the thing if you have one product that sells at $100 and you make 30 sales a month that’s $3000 a month and $36,000 a year. So, as long as you get your one product right you can absolutely add $36,000 a year to your passive income once you’ve been able to build an audience and learn how to sell this product to them.
$100*30 = $3000/month
$3000*12 = $36,000/year
If you’re willing to create your own digital products, check out the free digital product checklist.
Why create your own products?
The best part about creating your own products is that your income is not capped. As your experience and your audience grow you can definitely add more products on top of it to grow your revenue passively as well.
When it comes to making money through ads or affiliate marketing your revenue is very dependent on your traffic. As soon as you lose the traffic you lose all the revenue as well. There are more self-made millionaires from creating products than there are from people who monetize with ads.
Now, this doesn’t mean that one strategy is better than the other. You can start with one passive income idea and work your way up to multiple ones. You need to figure out what it is that suits you and your natural talents best. Also, what it is that you can give time and consistent effort.
The one thing that I want you to take away from this article is that there is no one particular way to make passive income online. There are so many different ways that you can try out and see what fits your needs best. It is also important to remember that none of these methods work overnight. You do need to give it 1-2 years before you start to see any kind of consistent income from it.