There are many ways to build passive income. Historically, some of the most popular have included investing in a specific portfolio and multiplying that money through compound interest, and buying and renting real estate.
But as social media and platforms like YouTube grow in popularity, many content creators are learning that they can reap the benefits of passive income themselves. Some make money by selling recorded courses online, for example, others make advertising revenue from their podcasts and YouTube videos, and still others make money through affiliates with their blogs or TikTok.
Sometimes the passive income these creators build is large enough to force them to give up their main jobs altogether.
If you’re interested in earning passive income yourself, and maybe even quit your job one day, here are three tips from entrepreneurs who are making thousands — or even tens of thousands of dollars — in passive income a month.
Sell an existing skill to supplement your income
Graham Cochrane, 38, was a full-time music producer trying to make ends meet when he started his blog and YouTube channel, The Recording Revolution. Originally the idea was to share his knowledge about music and get more customers for his manufacturing company. But he quickly realized that both were ways to make money himself. Today, this company brings in $40,000 a month in passive income.
When it comes to building 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 converting my audio mixing and recording knowledge into an online course,” he recently told CNBC Make It. Selling digital products on that basis “represented a passive income stream and allowed me to make a lot more money in a day — while investing less time — than I would have worked as a freelancer.”
After many years of building its online business, Cochrane has a second business offering online courses that teach people how to monetize what they know and are passionate about. That brings in $120,000 in gross sales and passive income per month.
Within a few years, he began to scale down music production. He now only works 5 hours a week on his online businesses.
Lean on how others have been able to grow successfully
Shannon Smith, 24, was fired from her job as a waitress early in the pandemic and has spent months figuring out how to make up for the loss of income. Initially, she worked about 10 hours a day as a fitness trainer. In July 2021, she started creating TikTok and Instagram videos teaching people how to build wealth and online businesses. She now makes about $8,000 a month in passive income through affiliate marketing.
“I see a lot of people trying too hard to completely reinvent the wheel with social media posts to get their business in the spotlight,” she recently told CNBC Make It. But “I’ve learned that the key “To go viral and grow your audience is to study what works for others,” she said.
Once you’ve found the niche topics you want to discuss in your content, Smith recommends studying and expanding on the conversations people are having around you. What questions keep coming up around you? She also recommends paying attention to what your successful competitors are doing with their content. Are you talking to the camera? Do you use long subtitles? And don’t forget to use the relevant hashtags that appear on your platform.
Smith no longer works as a fitness trainer and only spends two hours a day on her online business.
Diversify your income streams to make quitting easier
Michelle Schroeder-Gardner, 33, started her blog, Making Sense of Cents, in 2011 to track her college loan repayment progress while working full-time as a financial analyst. She now makes an average of $760,000 a year in passive income after expanding her coverage to include investment advice and financial products.