It seems like no matter who you ask, one goal that everyone seems to have is to eventually become financially independent. Even if they aren't looking to retire early and spend most of their time traveling the world, most people would love to simply be able to take their car to the mechanic without having to check their bank account balance first. One of the ways to get there is to start making money while you sleep. Yes, really.
Making money while you sleep is possible and can be done by creating multiple sources of passive earnings and residual income. These are revenue streams that will continue to provide disposable income long after the initial work is done and can often be set up relatively easily.
Creating residual income and passive earnings sources might sound like something that would be incredibly complicated and even expensive to set up; quite the opposite is true. There are nearly countless ways that you can make money in your sleep after investing an often relatively small amount of time, effort, or money. We're going to take a closer look at what making money while you sleep really means, as well as some actionable ways that you can start building multiple income streams immediately.
Making Money While You Sleep
Making money while you sleep is often said jokingly, but it's quite possible to have multiple income streams set up that can generate income for you without any other effort beyond setting up. This is known as residual income or passive earnings. Passive income, in the eyes of the IRS, is income generated by rental properties or from businesses you take no active role in, such as dividend stocks.
Dividend stocks are a good example of one type of way to make money while you sleep that only requires an initial investment of a relatively small amount of money and only a negligible amount of time. They may only generate a few cents of income per stock, but you don't have to do anything to get that money. All passive income will be similar, do some initial work, and reap the benefits into the future.
Best Ways To Make Money While You Sleep
There are more ways to make money while you sleep than you could possibly imagine, and while there are a ton of scams out there, there are some legitimate and seriously lucrative ways to generate passive income and earnings without doing much beyond the initial work. Here are some of the most popular and readily accessible.
Sell Digital Designs
For those that can create digital designs and artwork, they can be turned into a robust residual income stream with little effort and almost no cost. By creating digital designs and uploading them to a platform like Redbubble, Zazzle, or Cafepress, people can buy items with your art on them while you get a cut of the sale. Once you create the designs and format them for the various items, your income generation is on autopilot.
Leverage Social Media
Those that have significant or incredibly active social media followings can often leverage that into passive income. There is almost no cost involved in this, but it will require lots of time invested, as well as the talent to remain engaging and relevant. Even if your channel appeals to a relative niche audience, you can find that niche and quickly become a recognized authority in it. Over time this can translate directly to residual income and ad revenue.
If you already have a robust social media following and have begun to leverage that, you may be able to become sponsored. Sponsorship can mean your entire episode production costs are taken care of, or it can mean you get free products and affiliate status, earning you a cut of every sale your sponsorship generates.
This is a lesser-known way to generate passive income, and it's also one of the ways which require the least amount of effort to get going. There are many companies that will not only pay you a small monthly fee to put their advertisements on your car, but when those advertisements convert to sales, they use your affiliate code, and you earn a percentage of that sale as well.
Dividend Stocks & Funds
Investing in dividend stocks or managed funds is another way of generating passive income that has been around for decades and is minimally influenced by technology and social media trends. You will need to research dividend funds and stocks that are appropriate for your budget and risk tolerance, but once you find one, it can make creating residual income as easy as scheduling a weekly or monthly purchase from your broker.
Host An Airbnb
If you have a property with more space than you may need, or if you have an entire house or apartment that you'd be willing to rent out on short-term bookings, hosting an Airbnb might be perfect for you. Even if you're going to be away for a weekend on vacation, you could host your space for that particular weekend and generate income from it.
Rent Out Real Estate
If you have an extra property you were considering renting but don't want to deal with the hassle of keeping your listing booked and minimizing vacancies, consider renting it out long-term. By renting to tenants on a month-to-month or yearly lease term, you can build a highly consistent and reliable passive income stream. You can even hire a property manager so that you don't have to worry about most of the usual landlord duties.
Invest In An REIT
If passive real estate income sounds good, but you don't personally have the property to rent out or simply don't want to rent your personal or family property, consider investing in a real estate investment trust. These are companies that own and manage larger commercial properties, and they pass along most of the income to their investors. This creates a similar passive income as dividend stocks since it operates in much the same way.
Keep reading: Can Stocks Go Negative? And Can You End Up Owing Money?
Make An App
Just about anyone can make an app these days; you just need a winning idea. Even if you don't have any programming experience, there are app-building platforms and websites out there where you can build your app, test it in sandboxes that imitate all types of mobile devices, and then publish it to an app store. If it gains enough popularity, you can host in-app ads or charge a small fee to download it.
More like this: How Much Money Do I Need to Invest to Make $1,000 a Month?
Having capital to lend can earn you significant residual income while you sleep. There are online platforms such as Prosper and Payoff, which allow you to lend money in a peer-to-peer setting that they help to facilitate. Acting as a third-party intermediary, they take care of most of the risk assessments in screening the credit for potential borrowers, and your earnings can be withdrawn from the site or sent directly to your bank account.
NFTs are an extremely new way of generating residual income and work similarly to other digital art sales, with a little more transparency. You can create thousands of pieces of art, upload them to an NFT marketplace that allows what's called "lazy minting," and you will get most of the crypto proceeds when it sells. Additionally, every time that asset is sold or traded, the creator also gets a percentage of that as a hard-coded function of the NFT.
Become An Affiliate
You have probably seen affiliate links before, and they can be a great way to make money 24 hours a day. All you need to do is sign up with a seller that offers affiliate marketing and start posting your personal links. Anytime someone clicks on an affiliate link you provide and buy something, you get a percentage of the sale. With platforms like Amazon, this can be a powerful way to keep generating passive earnings while you sleep.
Publish An E-Book
Publishing books used to be difficult, but now there are several platforms that allow you to self-publish incredibly easily. Just upload a Word document, set up your layout, and you can put the e-book out there for anyone to buy. Every time you sell a copy, you get a percentage as residual income. Write and publish enough interesting e-books, and you will have significant income without having to do a thing after publishing unless you choose to market them.
What You Need To Know About Making Money In Your Sleep
Now that you know that making money in your sleep is much easier than you probably thought, there's never been a better time to get started on creating passive income. Be sure that you consider your skills and talents, as well as diversify your residual income streams so that you can hedge against inconsistency. Just remember what qualifies as residual income during tax time, and you'll be ready to start making money while you sleep.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.