Today’s topic covers a wide range of ways to generate passive income, especially with the home-based writer in mind. Let’s just dive in, shall we?
First, what is passive income? I like this description from Wiki…
Passive income is income that requires little to no effort to earn and maintain. [notice MY emphasis on maintain] It is called progressive [again, my emphasis] passive income when the earner expends little effort to grow the income.
That sounds simple enough, but let’s go ahead and admit that there will be some kind of effort to set up a stream of passive income. This effort comes in the forms of time and/or money. Some ideas I saw to make “passive income” aren’t that passive, so I’m going to focus mostly to true forms of passive income where once your “investment” is finalized, it continues to work for you for a long, long time.
Let’s start with time. One person’s idea of using their time to set up a stream of passive income might be another person’s worst nightmare. For instance, while researching for this blog post, blogging (for money via ads, product placement, and affiliations), designing book covers, and copyediting were listed as ways to make passive income. Unless each blog post can be used over and over forever, that’s not truly passive income. Copyediting is work… since you have to contribute your time for each project. IMO, that’s not fully passive. So, for a venture to be truly passive time wise, it needs a bit of time to set up, then it churns out money for years to come. Examples: writing/publishing books, becoming an affiliate, creating podcasts or videos in your area of expertise.
Money. Some passive income strategies take more money to set up than they do time, although there is a learning curve for everything, of course. We’ll come back to this, but a couple of good examples are dividend investing and rental property. While these aren’t specific to writers, this post is about using your time and money to create passive income, and I’m all about that, as long as it’s legal.
One other thing before we jump in. Whether you are working a public job, working from home, retired, or a combination of all three, working out a steady stream of passive income to pay you a bit of “pocket change” can be done. Applied month after month, project after project, and year after year, and eventually, that pocket change can add up to enough to live on… and then some.
The College Investor website gave a really nice breakdown of all kinds of passive income strategies, with links and how-to’s. I combed through this list and found what looked to be the best of the best for true “set it up and forget about it” streams of income.
I highlighted the ones on this list that were most interesting to me personally and I’ll discuss them in order that the article above lists them.
Dividend paying stocks is what got me to thinking about passive income and led to this post. There’s a reason this article and many, many others list dividend stocks as the #1 source of passive income.
Dividend investing is so much easier and accessible to the average person these days due to commission free accounts and mobile apps so that an investor can buy and sell stocks right from their phone. That’s pretty cool. So if you like spending your free time crunching numbers, then this might be a way to add to your passive income “portfolio”.
This strategy will take a lot (a LOT) more money than time. I recommend reading Dividend Growth Machine by Nathan Winklepleck and The Snowball Effect by Timothy McIntosh if dividend investing interests you.
Check out the Dividend Aristocrats and the Dividend Kings. These blue chip stocks have consistently increased their dividend payout for (a gazillion) years. Okay, I’m stretching that a bit, but they are consistent.
Mind-Blowing Thought: AT&T, a Dividend Aristocrat, is currently paying 6.96% dividend yield per share. Shares of this writing were $29.92. Reinvest your dividends and your money continues to grow quarter after quarter, year after year. If you invested $10K into AT&T stock, at the end of 10 years, your stock should be worth almost $20 grand even if the stock price remained the same and the dividend payout continued to grow yearly. (This is not a recommendation to buy AT&T or advice on investing. It’s simply an example.) But who has $10K to invest? Not me, but the principal remains the same. Invest and continue to reinvest for your future and that of your heirs.
Final Mind-Blowing Thought: Marry a Dividend Investment plan to a Roth IRA. It’s a wonderful thing.
$$$ My Current Monthly Dividend Income on a small portfolio: $9.44 $$$
Okay, so now we’re getting to a passive income strategy that we, as writers, understand. Mostly.
As we all know, writing books is hard work. It takes a lot of effort on the front end. But the good news is that once your book is published and remains published, it has the potential to continually make you (and your heirs) money for many, many years.
Maybe it seems like it’s not passive if you are continually writing new books and adding new content to your backlist.
But it is. Passive income means that one book (print, ebook, audio, foreign, etc.) is creating passive income month and after month, year after year. If you have ten published books, then all of them have the potential to create passive income.
Final Mind-Blowing Thought: I know writers who make $10 a month and those who make $10,000 a month. (Or so I’ve heard.) Write that book and get it published.
Then do it again. The first is in the bag, so that income, even if it’s just $5 a month, is now passive income. Much like reinvesting your dividends in stock prices, the second book shines a spotlight on the first book and spikes its income threshold… if you do your job right. Then the third book spotlights the first two, and so on.
I already have several traditional novels and novellas published with Tyndale and Barbour, and I’m taking steps to Independently publish some novellas that have already been written and edited. All of this work feeds off of each other.
I'm working on a cover and will be formatting my first independent novella soon. As Seekerville is my witness, I will publish these novellas! All these other projects to generate income are nice, but it makes sense for a writer to write and get her stuff out there.
$$$ Let’s be real conservative and estimate that an author can make $10 a month off of a stable of 10 published novels and novels. $$$
If you have a knack for taking pictures, consider uploading them to a stock photo site. This seems like work to me, but for some who enjoy the process and is knowledgeable about photos, it could be fun and bring in a few dollars extra cash. Passive income from a hobby. What’s not to love? The College Investor has links to whet your appetite for this.
Online Writing Related Content, Reviewers, Influencers, and Affiliate Marketing
I lumped all of these together because they kind of go hand in hand. Are you an expert in some field that you could create audio (podcasts) and/or video (youtube, etc.) content? If you are, or you blog or maintain a website, or have a huge presence on social media, then you have the potential to monetize that experience. You might receive a free book to review, then also include the link to buy back through your Amazon affiliate account. Amazon Affiliates is a good way to share all your favorite products, including BOOKS.
Food bloggers do the same when they share a recipe and include affiliate links to purchase specialty items. Mommy bloggers blog about all things related to their kiddos. On a vacation a few years ago, my husband and I met a couple and their two kids from Germany who were bicycling across Canada and the US and blogging about it. They were influencers for a three-wheel tandem bike and kiddie trailer and blogged about their travels. It was a win-win for them and for the company they were promoting.
Also called Influencers, these bloggers receive free products to review all across social media. But a weight of responsibility comes with this. Just as publishers and authors vet the list of influencers they provide with free books, retailers vet their list of influencers. Only pursue this avenue if you truly believe in a company and their products.
Lumping advertising here. I have NOT gone down this rabbit trail with social media, but if you already have a platform, then why not? Search for things like, “five ways to monetize social media” or “monetize _________” (fill in the blank with Twitter, Instagram, Youtube, etc.). Watch a few videos and develop a strategy. If you are already reading and reviewing, you might be missing out on some lucrative areas of passive income.
Done well and with a mutual respect between the retailer, the influencer and the consumer, this is a two-fer for influencers: Free product plus being an affiliate for whatever product they’re promoting. Pretty cool.
Okay, I could go on and on, but you get the drift, and I need to wrap this up and let you guys share your thoughts on passive income.
Some bullet points to leave with you …
1) Do NOT think of passive income as a get-rich-quick scheme. We’re talking a dollar here, a dollar there.
2) Pick one or two (three at most) doable passive income strategies that appeal to you and only pursue those. Don’t get sidetracked with big $$$ signs. We’re talking PENNIES a week/month sometimes. After a while, you can re-think your strategy, add and/or take away an income stream if it’s not working in your favor.
3) Cash Back and Awards Points Opportunities. My mom is a huge believer in her Choice Privileges card which rewards points for travel. Do your due diligence and use cards that give you the awards you prefer. Since I rarely travel, this hasn’t been a good fit for me. Cashback Rewards Cards (#27 on the College Investor site) links to lots of cash back credit cards, so you might find one that meets your needs if this is appealing to you.
Did you get on the ebates wave a few years ago? I did (I think it was a Seeker who recommended it!) and made $64 back in 2018, mostly Christmas shopping that year. It fell by the wayside and I totally forgot to use it. Rakuten bought ebates, so I updated my account using my handy-dandy mobile app, and started intentionally buying things using Rakuten for cash back as of this writing. I’ve made a whopping $1.16 cash back this week on a Walgreens order for my mom … on an order I was going to place anyway. Plus, I got a discount of $10.80 for creating a new Walgreens account. (If you don’t have an old ebates account, you’ll get $10 for creating a new Rakuten account.)
Unfortunately, Walmart and Amazon have a zero cash back policy with Rakuten at the moment. Just so you know.
$$$ Savings last week using Rakuten and Walgreens: $11.96 $$$
Sign up for Rakuten and get cash back, plus if you use this link, I get cash back.
4) TRIM THE FAT - Cancel subscriptions you aren’t using. I just cancelled two that I thought I really needed in my life, but that I never use.
$$$ Monthly savings on those two subscriptions: $12.00 $$$
Bottom line. There are really NO real sources of passive income that I’ve found. Everything, and I mean EVERYTHING, in life requires SOME investment of some sort. The only thing I can think of that even comes close (other than manna from Heaven!) is a bunch of free-range chickens like my son has, but even then you have to pick up the eggs.
$$$ 2 dozen free range hen eggs, plus 2 dozen quail eggs: about $2.65 $$$
So, let’s add up the passive income I’ve intentionally generated over the last few weeks. Granted, some of these won’t be every month (like cancelling subscriptions you’re no longer using), but every so often (maybe at tax time), look at those recurring fees and see if you really want to spend $120 or $240 on something every year. If not, cut it.
$$$ $46.05 a month, including the eggs. Pretty cool, huh? $$$
(The eggs were a freebie, but kind of a fun aside this week)
Well, there you have it. Passive Income with just a handful of strategies. I wanted to touch base on SO many more of these, but this blog post has already gone on way too long. Did you come up with any ideas for passive income while reading this? Has this whetted your appetite to get that novel finished and published? Or maybe you’re ready to start that Youtube channel? I’d love to hear your ideas!
CBA Bestselling author PAM HILLMAN was born and raised on a dairy farm in Mississippi and spent her teenage years perched on the seat of a tractor raking hay. In those days, her daddy couldn't afford two cab tractors with air conditioning and a radio, so Pam drove an Allis Chalmers 110. Even when her daddy asked her if she wanted to bale hay, she told him she didn't mind raking. Raking hay doesn't take much thought so Pam spent her time working on her tan and making up stories in her head. Now, that's the kind of life every girl should dream of. www.pamhillman.com