Best Beginners Passive Income Ideas for 2023
Having a passive income gives you time to pursue other personal goals while keeping you going during financially difficult times. It can serve as a backup source of personal finance in case you quit your job or get fired.
Moreover, there has been a trend in mass retrenchments of employees since 2022. More than 200,000 workers have lost their jobs at different global companies, which include Amazon, Microsoft, Salesforce, IBM, Twitter, Capital One, Coinbase, and Gemini as of January 2023.
The recent mass layoffs are a clarion call to think in the direction of generating income from sources other than a formal employment contract. Take advantage of this opportunity to learn what passive income is and the best ideas for every beginner to create multiple sources of personal finance.
Meaning of Passive Income
Earning money on a consistent basis from work that has already been done or from labour that takes little to no daily effort on your part is known as passive income. An example of a passive income job is that of a blogger.
Note: The opposite of passive income is active income. It refers to the steady compensation that an employee receives daily, weekly, or monthly in exchange for continuously providing services on a regular basis. An example of someone receiving active income is a bank teller.
Why should you be interested in passive income?
Passive income is worth considering because you can increase your financial security through the consistent cash flow that passive income-generating activities provide. Besides, it brings peace of mind, more flexibility, and less pressure compared to what is possible in a typical formal employment arrangement.
How to Approach Passive Income Generation
Anyone ready to engage in the generation of passive income must be prepared to put in some amount of time and money at one or more points in the process, especially in the beginning. The fact that it is termed “passive income” does not mean you will do absolutely nothing and expect to generate revenue over time. Rather, you should consider it a self-employed profession that requires you to creatively package an original product or service that meets people’s needs.
To set up a reliable source of passive income, you need to identify your current resources that can be economically productive and offer them in exchange for money. For example, if you are a videographer with video editing skills, you can start a YouTube channel for free and share videos on a topic or trend you are interested in to generate passive income over time.
18 Winning Ideas for Generating Passive Income
There are many ways to generate passive income. They include online and offline options with low to high costs. Even a beginner in saving and investing can try them.
Here are our winning ideas for making money passively in 2023 and beyond.
1. Open a high-yield savings account
Saving money helps you accumulate funds that you can use to meet future or emergency needs. But when it comes to generating passive income, you need more than a typical savings account with just any bank or financial institution. That is because they mostly offer low interest on their savings accounts. Instead, you should go for high-yield savings accounts from some of the top neobanks, such as Chime and Varo, which offer a 2% annual percentage yield (APY) and 3%–5% APY, respectively. Over time, you will see your deposits grow while you do nothing extra.
2. Use cards that offer cashback
There are so many payment cards out there to meet a variety of online and offline shopping preferences. If you are interested in earning passive income, use only the best cashback credit cards for your purchases. In case you are hearing about earning cashback for the first time, read our post on credit card rewards, which shows the difference between points, cashback, and miles.
3. Rent out your car
If you have a car that you do not use regularly, you can rent it out in exchange for passive income. There are people in dire need of it, and they will readily pay you to use it for a day or a period of time. However, you should ensure that you deal with only people you can trust to avoid dealing with dubious clients. You can also use car rental apps or marketplaces like Getaround and Turo to manage this type of passive income business.
4. Rent out your free room
You can rent out a room in your apartment if you have one available for a specific amount of time. You can meet people who are seeking their next temporary accommodation through websites like Airbnb. You might need to renovate your room before listing it on this marketplace. That is because the platform has quite a high minimum standard of offers for its users.
5. Advertise on your car
Did you know that your car can be a source of passive income if you make it available for companies to advertise their products and services? Oh, yes, this is a cool idea for you if you often drive around densely populated areas and you are not bothered by seeing different things printed on your ride. All it takes to get started is to own a clean car and contact an advertising agency to match you with interested advertisers. Boom! You continue driving as usual and start earning cool cash passively.
6. Own a billboard
You can make a small initial investment in the business of owning one or more outdoor advertising billboards to make money passively. If interested, you need to find new strategic billboard locations, get the right permit or ground lease, and erect your structure there. Put your phone number on it for interested advertisers to contact you, or partner with an agency for a share of the proceeds. Keep in mind that you will need to renovate your billboard with time; the maintenance cost is usually less than your revenue from the business anyway.
7. Write an e-book
The ability to generate real passive income in the form of royalties through the sale of e-books is phenomenal. You can write about a subject in which you are an expert or one that is based on your experience in life from which others could learn.
The next step after writing and proofreading your book is to make it available for sale on an online store like Amazon, which will enable you to earn money each month without doing anything extra. Your income will increase as you spend more time advertising your e-book on various online platforms, including the likes of Facebook and WhatsApp.
8. Sign up on apps for passive investing
Provided that you have a smartphone with an internet connection, you can generate income without much direct effort using passive income apps. The money-making opportunities on such platforms include watching videos, shopping online, investing in dividend stocks, investing in crypto assets, and investing in real estate projects. Examples of passive investing apps are eToro, Kraken, and Fundrise.
9. Become a blogger
Almost anyone who can write engaging and interesting stuff can start blogging as a source of passive income. If you find this suitable, then choose a topic you are passionate about, buy a domain, or create an account on an open-source content management system such as WordPress to get started
After a while of consistent content creation, you will have built an audience and will be able to use your website for paid advertising of company products. Besides, adding Google Adsense to your blog for advertising pay-per-click items will enable you to make money passively.
Note: You may need to read one or more online materials on how to make money from blogging before launching your blog.
10. Go into affiliate marketing
Becoming an affiliate marketer is a smart way to earn money from companies. You use your platform to write content that promotes their products, and you get a cut of the sales. If you lack proficiency in writing, you can hire a copywriter who will be doing the credible product reviews and persuasively sharing the affiliate links.
Affiliate marketers can also make passive income through the Amazon Associates affiliate programme. Website owners and bloggers can sign up to be Amazon Associates for free. They create links on their websites to promote products from Amazon.com. In terms of rewards, referral fees are earned when people click the links and purchase items from Amazon.
11. Create a mobile app
If you have knowledge and experience in coding, programming, or software development, you can create a mobile app that meets the needs of a market to earn passive income. There is no limit to what you could introduce to the mobile app store. Your solution could be a new calculator app, blood pressure reader, personal budgeting app, a digital wallet for managing many bank cards, or anything else worth using.
There are two ways to approach this idea. One option is to charge users who wish to purchase your software a small fee for access or for premium features. Another is to monetize it with advertisements while making it free to use.
12. Create a website for jobs
If you are a web designer or web developer, you can create a job board for employers and potential employees to connect. Applicants should only need to make a few clicks to submit an application to a recruiter on your job board.
Furthermore, increasing awareness of your job board should take up the majority of your efforts. For this, you can create a press release, publish on social media, use paid advertising, or use any other online medium.
Now the reason for all that is to generate revenue. Therefore, you need to charge businesses for posting on your board and offer extras like unrestricted access to your talent pool to build loyalty. After a while of gathering a robust clientele, all things being equal, your passive income will grow significantly.
13. Sell stock photos online
If you enjoy taking a lot of images, stock photography might be an excellent passive income source. The images can be from any topic you would like to cover, such as cuisine, travel, events, wildlife, or sports.
As an independent photographer, you can list your photos for sale on several online stock photography marketplaces, like Shutterstock, Getty Images, and Adobe Stock, and make money doing so.
14. Lend money in return for interest
You can lend money to people in your social network that you trust, preferably those with good credit, and receive payment in the form of interest. It is even now possible to lend cryptocurrency.
Instead of doing everything yourself, online lending platforms are another option you have for loaning money to others. When someone is late in payment, the lending site has more power since it manages the transaction. Thus, it frees you of the risk involved in granting the loan yourself.
15. Start a drop-shipping business
A company can sell items using the drop-shipping business model without ever keeping an inventory of them. After a customer places an order, the business notifies the product's manufacturer or distributor that the order has been received and should be included in the customer's shipment. On behalf of the company, which is the drop-shipping firm, the manufacturer or distributor ships the product straight to the customer.
In terms of payment, the money usually moves in this order: the customer pays the drop-shipper, who then pays the manufacturer or distributor of the item to the customer. So, in essence, the drop-shipper is more of a marketer.
16. Start a vending machine business
If you can find the ideal location to install your vending machine, running this kind of business is a good way to generate passive income. When you place the machine at a strategic location where a high volume of people are entering and leaving it, you will stand to make a significant profit. A well-located vending machine may make €100 per week or even thousands of euros per day. But you need to obtain the necessary licence or permit to operate this kind of passive income business.
17. Create a YouTube channel
The passive revenue source that never stops is YouTube, serving as one of the ways to make cool and steady cash. However, you will not make money from your first video. The reason is that it entails enabling monetisation on your channel, having at least 1000 subscribers, having more than 4,000 viewing hours, and joining the YouTube Partner Program to start generating income through ad revenue. Later on, sponsored videos will add to your YouTube income.
The key to building a successful YouTube channel is to consistently produce new videos over an extended period of time. Ensure that every video you publish is high-quality and worth viewing in terms of graphics and message. The benefits of this way to make passive income will ultimately start to pay off if you persist.
18. Invest in real estate
One of the earliest ways to make passive income is by renting out property. To do this, you must begin investing in real estate, either by purchasing a house, renting out a space in your own residence, or using both ways.
As the landlord or property owner, you will be responsible for both the monthly rent collection and the management of maintenance issues whenever they arise. Also, prepare for insurance and other costs necessary to run this business.
Investing in real estate is typically difficult to begin because it requires a significant amount of money to purchase a rental property. Real estate is also highly illiquid, making it challenging to withdraw funds. You would have to sell the house in order to get your money back if you lost your job or other means of livelihood.
Note: No matter how good you are or become at taking advantage of the various ways of generating passive income as discussed in this article if you manage your money badly, you will still have a difficult time achieving financial happiness. Therefore, it might help to read our post on the worst personal money mistake to avoid.
FAQ
Passive income sounds like the perfect idea. However, as you may have gathered from this article, there are some drawbacks to it. Most importantly, it is not absolutely "passive" in nature. Otherwise, you would not have to keep track of your investment and make efforts to learn ways to increase your extra source of income. Furthermore, proper management of passive income usually necessitates a time commitment.
The only way to live off passive income is to have multiple streams of income, which could include having a job, whether full-time or part-time. Otherwise, a single source of passive income will hardly be enough to take care of your monthly expenses.
Yes, passive income is subject to tax like all other forms of income. However, the tax rate would vary depending on the source of the money, the nature of the business, and the law in your country or place of residence.
The best idea for passive income is one that costs you little money and requires little effort to start, and you have the skills and knowledge required to succeed in it. For example, if you are a good writer, writing an e-book or starting a blog could be your best source of passive income. But if you lack such skills, you should consider something different.
If you do not have much money to invest in something like real estate, the best way to make passive income is to turn your hobby or natural passion into money-making. For example, if you like teaching and have skills in video production and editing, you can create a YouTube channel and create videos through which you educate your viewers on the topics you are interested in. After a while, you can start making money by joining the YouTube Partner programme with a monetized account.
The Bottom Line
Your earnings can be significantly increased, and the gaps left by an 8-to-4 or a 9-to-5 employment arrangement can be filled through passive income. Regardless of where you are on your path towards financial security, each of the ideas shared in this post could assist you in generating multiple streams of income.
Engaging in passive income generation can help you avoid being hard hit by unfortunate circumstances. It will enable you to survive in hard times, such as those caused by rising inflation, trending mass layoffs, geopolitical conflicts, sudden technological shifts, new unfavourable regulations, and environmental changes.
Finally, it is not a must to have a passive income source, especially if you enjoy your full-time job and are okay with the pay. However, if you can combine your job with a passive income business, such as starting a YouTube channel or renting out your property, the extra financial reward will be worth it in the long term.
