You’ve probably heard about it before – bloggers, podcasters, and other business owners preaching about residual income. But what is residual income and what makes it so desirable?
Essentially, residual income is money you earn passively. The whole point of residual income is to earn money around the clock without having to do any extra work.
Sounds too good to be true, doesn’t it?
Fortunately, anyone can start earning residual income with some hard work and dedication on the front end.
How Does Residual Income Benefit You?
Imagine earning money while you sleep. Sounds appealing, doesn’t it?
Even if you continue to work a full-time, 9-5 job, residual income as supplemental cash can change your finances for the better. You can use the extra money to pay off your mortgage, student loans, or save. Or, even better: imagine you can earn a full-time income without having to lift a finger. You could retire early, knowing you are still earning enough to support yourself.
In a typical 9-5 working situation, you are paid for your time. You either earn a salary or an hourly rate. While you could potentially earn overtime as an hourly employee, companies don’t usually love to offer it because it costs them a ton of money. If you are a salary employee, you earn the same amount every paycheck, regardless of how many hours you work.
In either situation, you are limited in your earnings. Even if you can work more hours or shifts for overtime pay, you only have 24 hours in a day. But with residual income, your earnings are unlimited. Since it doesn’t require any additional effort on your part, you can create as many income streams as you want without being constrained by time.
This is why so many millionaires are involved in multiple projects and companies. They know that residual income is the key to building long-term wealth.
So if you are interested in earning residual income, here are a few ways to get started.
1) Sell Downloadable Books or Templates
Really, anything you can create for people to download in exchange for cash counts as residual income. Whether you create downloadable photos, eBooks, or templates, downloadable files are an easy way to earn passive money.
Typically, whatever you create, you can upload to your own website or to a platform like Etsy. People pay your list price to download your product. Your listing site then takes their cut, and you keep the rest. You don’t have to do any additional work once you’ve created the initial product.
2) Start a Blog
Typically, blogging requires a lot of initial work. But if you’re constantly producing quality content and working to monetize your blog, you can make residual income.
There are two main ways to make residual income through blogging – through advertisements and affiliate marketing.
To make money through advertisements, you need to first apply to an ad network, such as Google Adsense. You can then add a plugin to your blog that will automatically load advertisements. Anytime a reader clicks an ad, you make a small commission.
You can also make money through affiliate marketing. With affiliate marketing, you earn money by referring readers to purchase from a specific brand. You receive a unique link to the brand’s product or service they are looking to sell. You can implement this link into your website. Every time someone purchases through your referral link, you earn commission.
If you are new to blogging, you can still start implementing these money-making methods into your website. As your blog grows, you will already have a monetization strategy in place, so you can earn money without doing additional work.
If you are interested in starting your own blog, check out our tutorial here.
3) Purchase a Rental Property
One of the most popular ways to earn residual income is to invest in real estate. Many people find major success with real estate investments. By purchasing a home or commercial space to rent out, you can make a regular, steady monthly income.
Real estate does require a hefty financial and time investment on the front end, so it might not be for everyone. Often times, however, once people save and purchase their initial property, they use their earnings to purchase additional properties, making it a lucrative income source.
4) Earn Credit Card Points
While credit card points don’t necessarily count as income, you can earn cashback with no additional work. You just make your regular purchases and can earn points or cashback for doing so.
You can even use credit card rewards to earn free trips all over the world!
To find the best rewards credit card for you, check out our credit card guides below.
5) Invest in the Stock Market
Many people are already building residual income and not even realizing it. They are doing so through the stock market.
For instance, if you are participating in your employer’s 401(k) plan, your money is (hopefully) growing and will continue to grow.
And you don’t have to just stick to your retirement account. There are so many ways you can start earning money through the stock market today. One way to potentially earn a faster return on your interest is through dividend stocks. You can start investing in dividend stocks by choosing a brokerage such as Ally Invest. Trades start at just $3.95 a piece, making it an affordable brokerage option.
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6) Rent out a Room
Don’t have the cash to purchase a rental property? No big deal – you can rent a spare room instead.
Housing a tenant is a great way to earn steady residual income. The key is to find a reliable, easygoing tenant who won’t create a bunch of unnecessary work for you.
Charging a tenant $500 a month for a room won’t require much additional work from you at all, and can earn you $6,000 every year.
Or, if housing a permanent tenant isn’t for you, you could consider hosting periodically on AirBNB.
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7) Create an Online Course
Everyone has their unique knowledge and skill set. If you have ever considered sharing your knowledge, you can make good money by selling an online course.
With platforms like Udemy and Teachable, you can share your online course with students all over the world. The best part is, once you create your lessons, you’re done.
Do you have any residual income streams? If so, what advice do you give for those starting out?
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Love these ideas! Once my husband and I build up more cash flow + have investing and everything else squared away, we’d love to have a rental property!
That would be a great idea! Now that I hear you have bought a house, it’s the perfect opportunity to start getting ideas about rentals :)