Like most people, I'm always looking for ways to bring additional income into my household. Taking steps to save money is great, but that will only get you part of the way toward living a fiscally fit life. There has to be money coming into the house, too. I take advantage of ways to earn extra money on the job, and I usually receive an annual cost-of-living pay increase, too. However, there are other ways of making extra money without moonlighting. How? Through passive income.

By its definition, passive income is income you receive automatically, regardless of what you do. It's money that constantly flows to you. This doesn't mean that you don't have to work for it. There is usually a lot of work at the outset, but after you have everything in place, the money rolls in. How much is dependent upon what your source of passive income is and how badly people want to pay you for it.

Passive income is not a "get rich" scheme. Sure, some people make a lot of money through passive income; others don't. So, how do you earn passive income. There are a few different sources which can help generate passive income for you:

1. Blogging. A lot of people have been jumping on the blogging bandwagon to try to earn passive income. The income usually comes from advertising placed on the blog site. Others get paid to blog, but that isn't really passive income. Savvy Frugality generates a bit of passive income. If I stopped writing it tomorrow, the blog would continue to generate advertising revenue without my having to do anything else to it. That's passive income.

In the past, I have written articles for sites such as Associated Content. Although I'm not a regular contributor, my articles continue to generate income, and I receive (small) payments directly to my PayPal account once per quarter.

2. Rental payments. If you rent something to somebody else, whether it's real estate or some other kind of property, you are generating passive income. Sure, there is upkeep of the property, insurance, etc., but the property works for you.

3. Royalties. If you have written a book, recorded a CD or created software that people will download from a site, that is a form of passive income. A lot of work goes into creating the product, but after it is created it will generate passive income, provided people are willing to pay for it. Some popular musicians from the 50s and 60s earn more money in royalties now than they ever did when they topped the music charts. How? They continue to receive royalties from work they did decades ago, and their product sells more copies now than when they were "in".

4. Dividends and interest. If you have a nice sum of money socked away in a CD or high-yield bank account, you are earning passive income in the form of interest. Stock investments which pay dividends also generate passive income.

5. Other creative works. I have uploaded a few designs for T-shirts and mugs on, and this generates some income every time someone purchases my designs. The Revver Video Sharing Network pays uploaders for their videos when they are used. Are you a shutterbug? Create some stock photos and get paid every time someone downloads them from one of several stock photo sites on the Web.

6. Business partnership. A silent partner in a business in one which helps fund the startup of the business for a percentage of the business' profits. They don't actively work or manage the business, but they are a partner, so they earn money from the business.

You are only limited by your imagination when it comes to generating passive income. The point is to create something that will continue to generate revenue for you with limited to no other involvement from you after it is created. Even if it's only a few dollars a month, if it's truly passive it won't matter, because you aren't really working for the money anymore. It is generating money on its own.

I am earning passive income each month. It is not enough to warrant my leaving my "day job", but it supplements my regular income. Some people are able to retire early as a result of the amount of money they make from their passive income. I'm not there yet, but I'm always thinking of additional ways of making my money or my talent earn additional income on "auto-pilot".


  1. Anonymous // November 2, 2008 at 9:17 PM  

    Rental properties are absolutely awesome!!!
    Craig & I had several for over 25 years ... and they provided us with a significant source of passive income.
    It isn't always passive, as there is maintenance & upkeep on properties - but overall it ROCKS.
    In fact now is an awesome time to scoop up deals, with the glut in the housing market!

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