top of page

Get Ahead in the New Year Part 1: Passive Income

Wondering how to get ahead this year? You may have set some financial goals, like building an emergency fund or chipping away at consumer debt. But how do you get started?

Welcome to our three-part series called “Get Ahead in 2023!” We will give you ideas on how to jump-start your year to achieve your goals. In this series, we will cover things like passive income, cutting hidden expenses, and potential side hustles.

To kick things off, we look at developing a passive income.

What Is Passive Income?

Passive income is a term that has been thrown around a lot in the past couple of decades. What exactly is it? And how can you acquire it?

The easiest way to explain passive income is to contrast it with its sibling, active income. When you show up for work and are paid for the effort and performance that you have put in, that is considered active income. To compare it to a lab rat situation: you ring the bell, and you get the cheese.

On the other hand, passive income is being paid for something that involves little or no action on your part. If you are currently earning active income, passive income is an extra oomph to your overall income without too much effort. In your retirement years, passive income may be your only source of earnings.

The Internal Revenue Service calls this unearned income. There is no action on your part to earn it—and yes, it is subject to taxes.

Passive Income Ideas

How can you generate passive income? It usually initially requires either time or money to get started. Once established, it then continues to produce revenue for you without too much further attention.

Just to be clear, passive income is not taking on another job like freelancing, driving an Uber, or working remotely. This type of income is set up just one time and yields a continual collection of earnings after it gets going with no major effort on your end.

You can produce passive income by practicing any of these strategies:

Bond funds and bond ladders: A good bond strategy is a safe and stable investment tool that can yield income for years to come. Consult with a financial advisor to choose the best option for you and your financial situation.

Car wraps: If you own a car, commute, and live in certain areas, you might qualify to have your car wrapped as a moving advertisement. You could earn enough to pay for insurance or maintenance on your car without having to do anything other than drive where you normally do.

Cash-back: Signing up for a cash-back rewards credit card or cash-back app like Rakuten helps you to earn money or other rewards for everyday purchases.

Create an app: We all use apps on our smartphones! If you have a clever idea for an app, you can either develop it yourself or hire someone to create it for you. Offer it on the App Store for extra income.

Ebooks or online courses: Write a book or record an online course covering the subject matter which you are an expert on. Sell them on your own website, YouTube channel, or an online bookseller.

Employer match on 401(k)s: When you contribute to your employer-sponsored 401(k), many employers will match a percentage of what you contribute. This is free money, so don’t let it pass you by.

Photography: If photography is a hobby, your photos can generate passive income for you when uploaded to a photo-sharing site like Alamy where others pay to download your photos.

Rental property: Whether it is a single-family home, condo, or accessory dwelling unit on your property, rental income can bring in consistent cash flow.

Rental spaces: Unused attics, basements, garages, pools, and even parking spaces on your property can all be rented out on a short-term or long-term basis to provide you with extra money. You can also rent out your RV when you aren’t using it on apps like RVshare.

Stocks: Stocks call for an initial investment up front. However, they generate a way to build wealth that lasts—making them another way to make some extra income.

How to Get Started

If you feel like you have just taken a drink from a fire hose, don’t despair. There are so many creative ideas for getting started on a passive income stream that it can be overwhelming.

First, you will want to ask yourself a few questions:

How will I use this?

Is this extra cash flow needed to build up an emergency fund? Or will this cash flow go toward paying off your student loan? Identify what you want to do with the money you will be earning.

What am I willing to invest?

Are you willing to invest time, money, or both? Getting a passive income generator started requires an investment of time (like writing a book or creating something) or an investment of money (purchasing bonds, stocks, or contributing to 401(k)s).

What is my next step?

It is tempting to take the plunge and start several things all at once. Narrow it down to one idea and work on just that one. Developing passive income requires effort in the beginning, and you will want to focus on it and dedicate the time and resources needed for it to be successful and actually produce for you.

Final Thoughts

You want to get ahead of the game this year, and you are off to a good start by reading up on how to do that! In the first article of this three-part series, you’ve received several options on how to generate passive income to add to your overall earnings this year. Now, it’s up to you to choose one and get started.


bottom of page