32 Passive Income Ideas to Kickstart Financial Independence

Did you know there are business ventures that require very little of your time on an ongoing basis but can bring in significant income? This is known as “passive income," and for me, it's the building block of financial independence.

I love that there are so many ways to increase my income without adding more stress or a larger workload to my days. But what works for me may not be the right recipe for you; I suggest browsing the list and choosing the ways to make extra money that don’t feel like ‘work’ to you. This can be the building block to help you reach your financial goals.

Keep in mind that some of these opportunities don’t require an upfront investment, and others do, but then your money works for you. I suggest only choosing those you are comfortable with while ensuring you know the risks involved.

What is Passive Income?

Passive income is money earned from an activity that requires little effort and that you wouldn’t consider a job. The IRS defines passive income as money earned without your material participation, such as working a full-time job.

What I notice many people assume, though, is that passive income means no work at all. While I wish that were the case, many opportunities to earn extra income require some sort of work, even if only initially. It’s just not the same level of work you’d give your employer.

However, there are some activities that you can earn income doing that literally pay you while you sleep. I’ll cover opportunities on both sides of the spectrum to help you diversify your efforts and maximize your income.

How to make passive income with no initial funds

I like including as many opportunities as possible to make money without an initial investment. While I’m no stranger to investing money upfront to make more money, these opportunities are good fillers, especially since some require little to no effort.

Rent ad space on your car

If you drive frequently, companies may pay you to display their advertisements on your car. Each company has different requirements since it has its own target audience.

The two most popular companies that pay you to wrap your car are:

• Carvertise
• Wrapify

Both services match you with companies looking for someone with your driving habits.

Carvertise says you can make $450 - $1,500 per campaign. However, remember that each campaign runs for a different length of time. I suggest calculating the minimum amount you want to earn daily and only accept campaigns that help you reach that goal.

What I like the most about this gig is that you control which ads you allow on your car. You’ll know all the campaign details before accepting the campaign so you can determine if it’s something you’re comfortable advertising on your car and if you can meet the driving requirements to earn the income.

Rent out your unused car

If you have less frequent driving habits and your car sits unused frequently, consider renting it to people who need a car in your area. Many apps allow you to advertise your vehicle to a large audience of potential renters while handling the administrative part of the transaction.

The most popular apps include:

• HyreCar
• Turo
• TravelCar

If you choose this option, ensure you are clear about the terms you’ll allow for the rental. This includes when the car is available, what you will and will not allow in the car, such as smoking or pets, and any other details you want covered.

Rent your extra room

If you have a house with extra space, a vacation home, or you travel often, you can turn your unused space into passive income.

The most popular apps to list a house for rent include:

• Airbnb
• Vrbo

If you only have a room to rent, Airbnb is your only option, as Vrbo doesn’t allow space sharing. But if you have an entire house to rent, either one is a great option for short-term stays. This gig is primarily passive. However, it’s your responsibility to maintain the property, clean it (or pay for a service), and handle any necessary repairs or issues that occur. I suggest figuring the average cost to maintain the property into the cost of running your business so you have a better idea of how much you can earn.

To give you an idea of the type of income you can expect, the average house listed on Airbnb in Dallas, TX, earns hosts $175 a night, or $1,225 weekly. Both apps allow you to set your own pricing, but they offer suggestions to help increase the likelihood of finding tenants.

Sell your lesson plans online

Teachers work hard inside and outside the classroom, but you can turn some of that work into passive income. If you excel at creating lesson plans, worksheets, or other tools teachers can use in their classrooms, you can create the content once and then sell it to fellow teachers.

Popular places to sell your teaching materials include:

• Teachers Pay Teachers
• Etsy

Keep in mind that both websites charge a fee to sell your content on their website. Consider it the administrative fee for accessing either company’s large audience. Both TPT and Etsy provide you with your own ‘storefront’ to customize and use to attract customers to make extra cash, doing something you already love.

Create an online course

If you’re not a teacher but have expertise you can share with the public, you can create an online course. You’ll help people around the globe acquire new skills while you earn residual income every time someone purchases your course.

The following sites offer great opportunities to create and sell your course:

• Skillshare
• Udemy
• Teachable

In addition to creating your own course, some sites, like Teachable, allow you to sell PDFs, audio clips, and digital downloads to further your passive income. The key is to find an underserved niche within your chosen subject area to minimize competition and make more money.

Write a book and sell it online

At one point, publishing a book was a costly venture, but online self-publishing only requires your unique knowledge about a topic to become an author. Writing a book isn’t a passive activity, but if you put in the work upfront, you can continue to sell copies without much ongoing effort.

There are a few online tools that can help:

• Kindle Direct Publishing
• Lulu
• Blurb

Before writing a book or even starting your outline, I suggest you do some research within your desired niche. Look for areas that other authors may have overlooked that have decent demand. By catering to this smaller audience, you’ll have less competition, be more visible, and will potentially make more sales.

Create a design and sell it online

If writing isn’t your speed but you have a knack for the visual arts, there are other digital products you can create and sell online. A few options that I know sell well include funny t-shirts, hats, creative mugs, artwork prints, and greeting cards.

Some great tools to help you create and sell your designs include:

• Redbubble
• CafePress
• Zazzle
• Society6
• Etsy

Compare your options before choosing a site to create and sell your designs. Each service has different pricing options, such as a per-item sold fee or monthly membership fee. Compare the costs to what you have to sell to ensure they make sense.

I also suggest looking through any sites you’re interested in using to sell your designs to size up the competition and ensure there’s room for your designs without too much competition.

Make YouTube videos

Making YouTube videos definitely requires some upfront work, but once you build a large audience, you can join the YouTube Partner Program and make money through Google AdSense. To be considered for the program, you must have 1,000 subscribers and at least 4,000 watch hours over the past year or 10 million valid public Shorts views in the last 90 days.

You can do this part-time and even switch to full-time once you begin producing enough revenue.

Please note that this method takes time and patience. You won’t have 1,000 subscribers overnight, maybe not even in a few months. The key is finding the right audience and getting their attention with the right keywords to get your desired views.

Sell photography

I love this method of making passive income because it allows you to express your creativity while earning income. If you already have high-quality images on your smartphone, you can sell stock photos by uploading them to one of these stock photo sites and getting paid for each download.

• Shutterstock
• Getty Images / iStock

If taking photos is a hobby you already have, this is a pretty low-risk venture that can earn you some extra cash.

Build an app

Building an app will require a significant time commitment like building an audience for your Youtube channel. But if you love IT and have an idea for an app no one has created, you may have a nice target audience.

There are even app builders that don’t require any code, just a great idea for an app. If you’re looking for no-code app builder software, consider the following:

• Softr
• Bubble

Keep in mind that, like most ways to earn passive income that I’ve listed, search engine marketing, using proper keywords, and finding ways to market your app is key to earning more money.

Affiliate marketing on an existing blog

If you already own and run a blog, consider adding affiliate marketing links to your blog posts. You may earn a small commission each time someone clicks on your link and purchases something.

While this method does require the work of creating blog posts, the affiliate links continue earning you money as long as your blog post exists.

A couple of great affiliate marketing programs to consider include:

• Collective Voice
• Amazon Associates Program

When choosing which affiliate links to use, ensure they are a good fit for your audience and that they are products you stand behind. Don’t throw affiliate links in your blog posts just to make money. Your audience will be able to tell when you’re passionate about a product and when you throw in a link just because you might make a few dollars.

Become a referral source

While not 100% passive, you can network with local businesses to see if you can get paid for referring new customers. Companies often pay for referrals because it’s less work and money they must spend on marketing. This works especially well if you have a large social media following or are part of large groups.

Many apps also pay for referrals, such as:

• Rakuten
• Swagbucks
• DoorDash

My suggestion is anytime you join a new app, inquire about their referral program. Many apps will pay a one-time bonus or a percentage of your referral’s lifetime earnings, so it’s worth the couple of seconds it takes to refer them.

Open a credit card with a lucrative sign-up bonus

One of the simplest ways to earn extra money is to open a rewards credit card with an impressive sign-up bonus. You can earn several hundred dollars or more by meeting the bonus requirements if approved. Usually, this means spending a certain amount of money within the allotted time; however, if you use it to buy items you normally would, it’s like getting free money.

Some of the most popular reward credit cards include:

• Capital One Venture X Rewards Credit Card
• Chase Sapphire Preferred^® Card
• Citi Strata Premier℠ Card

Before I apply for a new credit card with a sign-up bonus, I always read the fine print to ensure I can meet the spending requirements and that the annual fee makes sense based on the potential rewards I could earn.

Earn cash back on credit cards

You may miss out on a lot of free money if you’re still using cash or a debit card for your purchases. If you’re spending money on the things you buy anyway, why not use one of the best cashback credit cards that provides easy cashback rewards on every purchase?

Some of the most popular cashback credit cards include:

• Wells Fargo Active Cash^® Card
• Capital One Quicksilver Cash Rewards Credit Card
• Bank of America^® Customized Cash Rewards credit card

Earning cash back on credit card purchases is one of my favorite ways to earn passive income. To make the most of it, I have credit cards that reward me for my most frequent purchases, including grocery shopping, household goods, dining out, and travel.

But if you don’t use credit cards, there are ways to earn cash back on everyday purchases without using a credit card. Check out one of our favorite options below.

Earn money while shopping

Whether you’re a shopaholic or just have a few mouths to feed, you can earn cash back or gift cards by shopping at grocery stores and other retailers using a cashback app. Fortunately, this method requires little effort, but it won’t pay the bills. You’ll earn a few cents or dollars with each purchase using the following apps:

• Capital One Shopping
• Swagbucks
• Fetch Rewards
• Ibotta

Before choosing which cashback apps you’ll use, determine which pays the most for the purchases you make most frequently. You must stick with one app to avoid having canceled rewards for using multiple apps.

For example, if you’re using Capital One Shopping Rewards for a purchase but exit out before making the purchase, and in the meantime, Swagbucks activates on your computer, you may lose the potential reward with Capital One Shopping for that purchase because it tracks what apps you use to avoid double-dipping on rewards.

Earn cash or gift cards for eating out

If you’re anything like me, you love to eat out. There’s something to be said about trying new foods and experiencing various atmospheres, but it can get costly. Fortunately, you can turn dining out in a passive income experience with these apps:

• Seated
• Field Agent

With the Seated app, you can earn up to 30% back in rewards for every meal you eat out at one of their participating restaurants. That’s a lot more in gift cards than you would earn with a credit card, even one with extra points on dining. It’s currently available in six major cities.

I personally wouldn’t rely on the income earned eating out, but instead, treat it like ‘fun money.’ Whether you earn cash back or points you can convert to gift cards, use the money on something you normally wouldn’t spend money on, and reward yourself for the work.

Enter sweepstakes

You might not think sweepstakes are passive income, but they generally take only a minute or two to enter. Whether you’re sitting in a waiting room or just killing time, you can enter to win free sweepstakes on your phone or computer.

• PrizeGrab

There’s no guarantee that you’ll win money entering sweepstakes, but it can be a fun way to earn a little passive income. I suggest that you read any contest’s fine print to ensure you are comfortable with their privacy settings and how they use your information, as some sites sell it to third parties.

Passive income ideas if you have money

Some passive income opportunities require a small upfront investment or require you to spend money to make it. While it may feel like a scam, the following ways to earn money by spending money are legit.

However, I urge you to do your own research and ensure any opportunities you pay for are legit and that previous members have received payment so you don’t risk anything.

Start small by investing $5

A lot of people avoid investing because it sounds intimidating or like you need a lot of money to use a traditional brokerage. Fortunately, it’s easy to invest today with as little as $5 with micro investing apps.

Stash is a good example of an easy place to get started.² For as little as $5, you can make your first investment in two minutes and learn how to become a confident investor over time.³ Plus, you’ll have access to over 40 different investment options, so you can invest in what matters to you most.

Buy music royalties

If you’re a music buff who enjoys discovering new artists, this might be the venture for you. With Royalty Exchange, you can purchase a portion of an artist’s royalties via auction. You’ll then receive a return on your investment when the organizations that pay royalties, such as radio stations and streaming services, use the piece of music. You can view the history of the song’s earnings to determine what you might earn over time. And buying royalties isn’t tied to the stock market, so there’s less risk that prices will change.

Buy someone else’s blog

Building a blog on your own can take time and patience. But, if you have money available, you may want to consider buying a blog that you think has potential or already has an existing follower base.

To make the most of this opportunity, I suggest looking for one that is lucrative and in a niche you're actually interested in. Once you own it, you can monetize it using affiliate marketing, ads, or related products.

Invest in index funds or ETFs

An index fund is a collection of stocks designed to match or track a market index, like the S&P 500, while an exchange-traded fund (ETF) is like a basket of stocks, bonds, and other assets. There are also mutual funds and dividend-paying stocks to consider. The key is to diversify your portfolio so you offset the risk of certain assets with less risky ones.

If you want a truly passive income opportunity when investing, focus on index funds and ETFs because they are hands-off, meaning you don’t have to manage the investments. Instead, you can sit back and watch what happens.

Before choosing this option, I suggest you speak to a financial advisor to learn how to start and what factors you should consider, such as capital gains taxes and tax loss harvesting.

Buy equity in a small business

When you buy equity in a small business, you provide capital in exchange for a share of the profits or losses. There can be a lot of risk involved, so make sure you feel as confident as possible in a business’s future before choosing to invest.

Invest in rental property

Investing in real estate is one of my favorite ways to earn passive income, and there are several ways to do it.

• Hire a property manager: If you have adequate capital, you can purchase properties and hire a property manager to manage them for you.
• Duplex hack: You can buy a multi-unit property, such as a duplex, live in one unit, and rent out the other. Mortgage companies consider this an owner-occupied property, so you get better financing terms.
• Invest in REITs: Real estate investment trusts are companies that buy real estate and sell shares of their company to investors, paying them a portion of the proceeds.

All investors will have different real estate investment strategies. The key is to determine what works best for the capital you have, your risk tolerance, and your ultimate financial goals.

For example, if you don’t have much money saved but qualify for financing to purchase a duplex, you can immediately become a real estate investor without too much work or capital.

Become a real estate crowdfunding investor

If you don’t have enough money to buy an entire building, you can still invest in real estate with a small initial investment. Real estate crowdfunding platforms include:

• CrowdStreet
• RealtyMogul
• Fundrise
• Ark7

Like any type of real estate investing, determine how much money you have to invest and what risk you can take. Next, consider the kind of properties you want to invest in, such as commercial or residential properties.

Also, pay careful attention to the required investment timeline. Some apps require you to keep your funds invested for a couple of years or longer, so be sure you know when you can access them if you have short-term goals for your money.

Buy vending machines

A vending machine business has a relatively low startup cost. Each machine costs as little as $150 to $400, plus inventory. You can buy an existing business or a franchise opportunity, like Kytch’s Frobots, which require very little upkeep. Some management will be required to stock and maintain the machines, so you may also want to consider hiring someone to help.

Buy parking spots

If you live in a high-traffic city — like Chicago, New York, or Washington DC — renting out a parking spot can be extremely lucrative and has a lower startup cost than buying real estate. That’s what Chicago, IL resident Moustafa Mohamed, 28, realized when he began looking into buying property.

His spot earns $250 to $300 per month in extra income, and he’s looking to buy more spots. “It will take me 4.5 years to earn back the $15,000 I spent on it,” he said, adding that the effort needed has been minimal. “I’ve invested maybe a few hours a week to getting everything researched and getting the paperwork done for the deed.” His goal is to own four to five spots to rent out, and then he hopes to start buying condos.

Buy a storage facility

Like owning a parking spot, owning a storage facility requires very little work. While you may have to deal with tenants a little more as they access their space or have questions, you can expect to earn anywhere from $20 to $300 per unit in rent each month. The amount you can earn depends on the size and location.

Become a peer-to-peer lender

I like peer-to-peer lending because it offers a passive income opportunity and helps people who need money that don’t qualify with a traditional bank.

Peer-to-peer platforms match investors (like yourself) with borrowers. They ‘grade’ the borrower based on their credit history and the overall risk they pose. You can then choose which borrowers to invest in, and earn interest on the funds loaned.

Popular peer-to-peer lending apps include:

• Prosper/AmOne
• LendingClub
• Upstart

Like any type of investing, be sure you diversify your funds. For example, if you invest in a lower-grade loan for the higher interest rates, offset the risk with a higher-grade loan that may not have the high interest rate, but has a lower risk of default.

Open a dropshipping business

If you can find the right niche, a dropshipping business can be lucrative without requiring excessive ongoing effort. When you have a dropshipping business, you contract with a dropshipper who handles the inventory, shipping, and customer service.

Your only job is to find products to sell and market to your target audience. Knowledge of SEO is key to making this work.

Popular websites to use for a dropshipping business include:

• Oberlo
• Shopify

This gig requires plenty of research because it relies on you selling products to earn income. For the greatest success, try finding an underserved niche that solves your target audience's problems.

Open a high-yield savings account

If you have extra money in a checking account, you’re not alone, but a high-yield savings account can likely earn you a higher APY (annual percentage yield).

When you find the best savings accounts, you’ll likely enjoy no fees, high APYs, and no minimum balance requirements. If you have more time to keep your money locked up, you can also consider certificates of deposit (CDs) that offer high APY rates but require you to keep your money locked up for the duration of the CD.

My suggestion is to put any money you know you won’t need for a while in a high-yield CD while keeping any money you might need soon in an HYSA so it's accessible.

Build a bond ladder

A bond ladder is an investment strategy that involves a diverse portfolio of bonds with different maturity dates. According to Richard Carter, vice president of fixed-income products and services at Fidelity, "Laddering bonds may be appealing because it may help you to manage interest rate risk, and to make ongoing reinvestment decisions over time, giving you the flexibility to invest in different credit and interest rate environments.” But you’ll need a significant amount of cash to get started, especially if your goal is diversification, since bonds are typically sold in minimum amounts of $1,000 or $5,000.

Keep in mind that investing money can be intimidating, especially if you don’t have a lot of cash lying around. You may have to take some risk and it may require some effort upfront, but building a passive income stream is a great way to grow wealth without sacrificing what’s most precious to you ⁠— your time.

Bottom line

Learning how to build passive income is a great way to diversify your income. While your full-time job may pay the bills, your passive income could help you build a larger nest egg and reach important financial goals.

Whether you learn how to invest money, write a book, start a YouTube channel, or rent out extra space in your home, you could add to your monthly income stream and achieve the financial freedom you desire.