Making extra money from side hustles was popular even before the pandemic—44 million Americans had other sources of income in addition to what they made in their 9 to 5.Disclosure 1 That’s because passive income can provide extra cash flow along with a potential boost to your well-being.
“As long as your current employer is OK with it, I like the idea of establishing multiple streams of income,” says Brian Ford, Head of Financial Wellness at Truist.
While establishing passive income can require a heavy upfront investment of your time and even money, that steady stream of income will ideally require less effort to maintain over time. In some instances, you may even be able to make money overnight while you sleep, or even when you’re on vacation—but it’s not a get-rich-quick scheme.
“Start slow and see if you can build into an income-generating stream,” Ford advises. Like most entrepreneurial endeavors, you’ll likely go through a trial-and-error process and have to continue learning until you find your groove. “Education is the key.”
How to generate passive income streams
When we think of traditional sources of passive income, we mostly think about things that require a lot of capital—like owning a rental property or reaping the benefits of stock dividends and high-yielding bonds. But there are other ways to earn passive income out there, and you may find that some fit your passion.
For example, many aspiring authors have found varying levels of success writing and self-publishing their own e-books. Some developers have been able to turn the apps they’ve created into streams of passive income. And digital-savvy instructors have found websites like Skillshare, which allow you to create online classes that others can pay to watch.
Read more: The art of the side hustle
With some creativity and resourcefulness, you can find passive income opportunities that fit your lifestyle if you continue working on it and trying different things. If you’re not sure where to start, commit an hour or two this week to brainstorming ideas for what your passive income opportunities could be. You’ll never know if you don’t give it a shot. And—in case you needed more reasons—did you know that establishing passive income could prove beneficial to your mental well-being?
4 ways passive income can improve your well-being
1. It can stabilize you financially and ease anxiety: Money is a common source of stress for many Americans.Disclosure 2 Developing passive income is a proactive way of easing stress about your income and financial situation. Gaining financial confidence comes from feeling financially secure—and passive income can make it easier to repay debts and save money for future goals or emergency expenses.
2. It can provide more freedom: When you start making money from passive income, you may feel less constrained by your main job and could find more flexibility to explore other new income streams—like those more traditional passive income avenues (investing in stocks or real estate). This can lead to feeling more in control of your schedule and how you choose to spend your time. It could eventually allow you to spend time on other passions, whether it’s that camping trip you’ve been wanting to take your family on, a workshop or networking opportunity, or simply getting in shape.
Sometimes, passive income can also give you the freedom to work remotely—a major plus for those who love to travel.
3. It can provide a creative outlet: When financial commitments are taken care of, you have time and energy to invest in your creative hobbies and interests. Exploring your creative talents can open up more earning opportunities or simply give you positive energy. Could your creative hobbies become a source of passive income?
4. It can help you grow: Seeing more money coming into your bank account than going out can help you realize your potential—and not just your personal earning potential. Developing passive income can also help develop your growth mindset, which might lead you to look for even more ways to reach your goals while capitalizing on your talents, skills, and passions.
If you’re looking for ways to feel emotionally uplifted and spend more time on the things that add meaning to your life, consider starting a side hustle to earn passive income. After the initial work of establishing an additional income stream, the financial and mental rewards can potentially be reaped for years to come.