3 tips for making a passive income so you can quit your job, from entrepreneurs making $8,000/month or more
There are many ways to build a passive income. Among the most popular, historically, have been investing in a given portfolio and letting compounding interest make that money grow and buying and renting out properties.
But as social media and platforms like YouTube grow in popularity, many content creators are learning they can reap the benefits of passive income themselves. Some make money by selling prerecorded classes online, for example, others make ad revenue on their podcasts and YouTube videos, and others make money through affiliates of their blogs or TikTok.
At times, the passive income these creators build is big enough to quit their day-jobs altogether.
If you're keen to start making some passive income yourself and one day maybe even leave your job, here are three tips from entrepreneurs making thousands ― or even tens of thousands of dollars ― in passive income per month.
Sell an existing skill to supplement your income
Graham Cochrane, 38, was working as a full-time music producer trying to make ends meet when he started his blog and YouTube channel, The Recording Revolution. Initially, the idea was to share his knowledge of music and attract more clients to his producing business. But he quickly realized both were vehicles to making money themselves. Today, that business grosses $40,000 per month in passive income.
When it comes to starting your own passive income stream, Cochrane recommends leaning into the skills and knowledge you already have.
"The turning point for me was when I got the idea to turn my knowledge of audio mixing and recording into an online course," he recently told CNBC Make It. Selling digital products based on that "provided a passive income stream and allowed me to make far more money in a day — while putting in less time — than I did working as a freelancer."
After many years of growing his online business, Cochrane has a second business of online courses dedicated to teaching people how to monetize what they know and are passionate about. That brings in $120,000 in gross sales and passive income per month.
Within just a few years, he started scaling back on music producing. He now works just 5 hours per week on his online businesses.
Lean into how others have found success to grow
Shannon Smith, 24, was laid off from her waitressing job at the beginning of the pandemic and spent months trying to figure out how to make up for the loss of income. At first, she worked about 10 hours per day as a fitness coach. In July 2021, she began making TikTok and Instagram videos teaching people how to build wealth and online businesses. She now makes about $8,000 per month in passive income through affiliate marketing.
"I see a lot of people try too hard to reinvent the wheel completely with social media posts to get their business into the spotlight," she recently told CNBC Make It. But "I've learned that the key to going viral and growing your audience is to study what's working for others," she said.
Once you've found the niche topics you want to discuss in your content, Smith recommends studying the conversations people are having around them and expanding on those. What questions keep coming up around them? She also recommends paying attention to what your successful competitors are doing with their content. Are they talking to camera? Using long captions? And don't forget to use the relevant hashtags you're seeing pop up on your platform.
Smith no longer works as a fitness instructor and spends just two hours per day on her online business.
Diversify your income streams to make it easier to quit
Michelle Schroeder-Gardner, 33, started her blog, Making Sense of Cents, in 2011 to track the progress of paying off her college loans while working full-time as a financial analyst. She now grosses an average of $760,000 per year in passive income from it, having expanded her coverage to include advice about investing and financial products.
Gardner makes money off her blog in multiple ways, like affiliate marketing and various courses she created about blogging, and recommends other bloggers diversify their incomes streams as well.
"Diversifying your income streams allows you to not be reliant on just one way of making money or just one of your traffic sources," she recently told CNBC Make It. "Instead, you will have balanced income streams to mitigate risk."
She quit her job in 2013 and now works just 10 hours per week on her online businesses.
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