This post comes from guest contributor Deacon Hayes. Deacon is a frequent media contributor and blogs at Well Kept Wallet. He was also featured on a past podcast episode right here at Personal Profitability, where he discussed paying off $52,000 in debt. Be sure to check out his awesome site! Now, I'll hand it over to Deacon.
I have always been fascinated with the idea of making passive income. My first job was working in the concession stand at AMC Theaters where I was paid $5.15 per hour. At the time, that seemed like a reasonable amount of money, but I was only 15 years old and my monthly expenses were extremely low at that time. What I did realize is that I got paid only once for the work that I did.
When I worked, I got paid. When I didn’t work, I didn’t get paid.
This might not be shocking to you because this is the way that 95% of people make money. As I got older, I realized that exchanging time for money was not what I wanted to do for the rest of my life. I had heard of people making money over and over again for work they did once which intrigued me. They had referred to it as residual or passive income. Although it seemed too good to be true, it was extremely appealing to me and I wanted to find if it was legit.
And so the pursuit began.
Why you need additional income at all
The main reason you need more income is to make sure that you have enough income to achieve your financial goals in life. I recently found out that over 69% of people don’t even have $1,000 in savings. This is discouraging but doesn’t have to be the case for you. Have you ever sat down and figured out exactly what you need financially to live the life you truly want to live? If not, I encourage you to do that today.
Here are some questions you can ask yourself:
- Do you want to travel every year?
- Do you want to put your kids through college?
- Do you want to pay off your student loans?
- How about those credit card balances?
- Do you retire before the age of 65?
Whatever your reason is, let that motivate you to figure out which income source to pursue so that you can achieve your goals.
Finding the right passive income solution
While there is no shortage of ways that you can make passive income, it is important to find one that aligns with your skills, experience and preferably even something you are passionate about. So this mean if you are a guy, then Mary Kay is probably not the way to go.
Another piece of advice, don’t ever pick an option solely on the idea that there is a lot of money to be made. You want to make sure that it is something you are genuinely interested in so that you actually do the work necessary to get the passive income pump going.
Below are some examples to help guide you down the path toward residual income.
Some side hustles, although they appear passive in nature, can actually require you to work. For instance, if you want to start a vending machine business you would need to buy the equipment necessary to get started. Then you will need to find businesses that will allow you to place your vending machines. Then you will need to stock them up with the latest and greatest junk food or high-priced healthy snacks. Then you will have to check the machines on a regular basis and restock them as needed.
Sure, at some point you may be able to hire someone to do this for you. But what happens if they are sick? What happens if the machines break and need to be repaired? What if someone no longer wants to use your machine? As you can see, there are many reasons why this is not 100% passive and may require your involvement from time to time.
Truly passive income
One of the greatest ways to make real passive income is through affiliate marketing. An example of this would be writing a piece of content on a product that you absolutely love. For instance, think of a product that you rave about to your friends and family because you personally had such a great experience and think others would benefit from it just like you. How cool would it be if you got paid every time you referred someone to buy that product? Well, you can.
Many companies offer an affiliate program where they will pay you a commission for referring someone to purchase their product or service on their site. You publish an article about that product or service and you will get paid every time someone buys through your link. Essentially, you will get paid over and over again, for work you did once.
How many times have you done research about a product before making a buying decision, clicked on a link in an article, and then bought? Someone got paid for that transaction, why not let that someone be you?
This is the beauty of passive income on the internet. In most cases, your sales guy (aka your website) works 24 hours per day, doesn’t call in sick and doesn’t complain. I don’t know about you but making money online seems far more appealing than stocking vending machines.
Look at the track record of the product or service
As you can imagine, not everything that claims to provide passive income lasts forever. It is important to look at the history of the company behind the product and depending on the type of product, customer support. A great way to vet a product is to comb through genuine customer reviews of that product. Make sure to look at the one star reviews to see what legitimate concerns a paying customer has about that product.
Obviously, there are people who are just upset that the product wasn’t delivered on time and leave a poor review, but that is not what you’re looking for. You want someone who appears to give an honest assessment of how the product works and what it lacks, so that you can make an educated decision. Needless to say, it is best if this is a product that you already know and love. That makes the process that much easier.
So, if you want to be the 5% that works once and gets paid again and again, then it is time to do the research and find the passive income opportunity so that you don’t have to trade time for money the rest of your life.