passive income

What is Passive Income, and How Do You Earn It?


If you’re like us and you’ve been looking for ways to build up wealth, or need additional income to help reach a financial goal (like paying off high-interest loans), you may have considered taking on a part-time job, side hustle (Have we mentioned we LOVE side hustles at FO?), or other avenues to help you get there. While a part-time job or picking up additional hours at work can certainly help, passive income may be the answer to helping you reach those financial goals even faster. 

But what exactly is passive income, and how can you leverage it to achieve your dreams of financial freedom? Read on as we explain what passive income is, along with three ways you can start earning passive income of your own today – no financial degree or expertise required! You’re welcome.

What is Passive Income?

You’ve probably heard the saying “money doesn’t grow on trees,” but, with passive income, it can sometimes feel like it does! 

Passive income is just as it sounds: earnings received from income sources where a person does not need to be actively involved. Passive income sources include rental properties, dividend stocks, and even selling eBooks online. 

Passive income is a way to build up wealth, and, when someone has multiple sources of passive income, it can even help you afford to quit your day job and rely on passive income as a main source of revenue. 

Three Ways to Earn Passive Income

Buy Dividend Stocks

In their most basic terms, dividend stocks are stocks that provide regular payments to shareholders for the value they accrue (typically paid out on a quarterly basis). Because of their regular payments, dividend stocks are a great way to collect passive income, since all  you need to do is own the stock. And, the more shares you own, the higher your payout. Just sit back and watch as the money is direct-deposited to your brokerage account.

Publish an eBook

If you’re an expert in a niche topic and have some technically savvy skills, self-publishing an eBook could be a relatively simple way for you to start collecting passive income. 

eBooks have low publishing costs and the ability for worldwide distribution through sites like Amazon, so the only real upfront risk is your time spent writing one. Start by selecting a niche area you can write about, create a short (30-50 pages) eBook, and design it in a site like Canva. The more value you can add on a desired topic of reader’s interest, the more downloads you get, which means more and more passive income in your bank account over time. 

Invest in Rental Properties

Investing in rental properties can be an effective way to earn passive income – but only if you’ve done your research beforehand. Be sure the property you invest in has a desired market, and always take the property’s total costs and expenses, along with any financial risks associated with owning the property (such as a decline in property value in the area) before moving ahead with the decision to buy.

If you’re able to charge enough rent to outweigh the upkeep and maintenance costs, along with property taxes, associated with owning a property, you can begin earning monthly income through tenant rental fees. The more profitable properties you own, the more passive income you can accrue.

… Or Rent Out Your Home

If you’re not quite sure if being a landlord is right for you, you can start by renting out your own home for short-term vacation rentals through sites like VRBO or AirBnB. By renting out your home for a weekend or two, you can get an idea of whether or not you enjoy working with tenants before making the leap to investing in rental properties. 

Whether you decide to invest in a rental property, stocks, or become a best-selling, self-published eBook author, building up your passive income streams can help you earn additional income and reach your financial goals faster. 


The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, we advise you to consult with a licensed advisor.

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