How to Make Passive Income: Quick Start Guide

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Ever wanted to know how to make passive income? Where to start and how to begin as well as what passive income streams should I focus on first.

This article will Cover the following:

-Measure Where You Are

-Create a Passive Income Practical Framework

–Gather Passive Income Practical Learning Material

-4 Step Written Plan Process

-Decide on an End Game or Final Outcome

-Passive Income Investments & Options to Explore

In this article we will discuss passive income and tools that can be used to help advance your efforts. Throughout out lives we have always heard the word passive income.

It’s a word or phrase that brings excitement and open up possibilities of more freedom in terms of people. The basic definition of passive income is income that requires no effort to earn or maintain. To me this is fully passive income.

There are occasions where something may be partially passive income meaning you may be involved a little but not fully involved yet you receive income.

Examples could include real estate and if you manage it yourself your involved or even with shared management so your not their all the time your still a little bit involved as you make money.

Real estate can be fully passive if your using or hire a real estate management company. Altogether, regardless of the asset, real estate as the example, depending on how it is used and managed determines if its a passive income stream, whether fully or partially.

The confusion is that people wanting to make passive income don’t know where to start or how to execute it.

Measure Where You Are

In the rest of this article, I’ll share tools you can use to self-educate yourself about passive income streams, how to make an action plan on paper and determine the end goal before you even begin.

Below is an Income Distribution in the USA regarding Income. Everyone is different and has different aspirations but we all need to aim high. We need to aim high in terms of income growth and passive income stream creation. Observe this chart and then measure yourself so you can set goals to get in a higher income distribution group at least two groups or more from where you currently are.

Before we continue lets start with knowing your end game for passive income. Saying you want passive income is not enough.

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Create a Passive Income Practical Framework

To get started answer these following questions.

(1) Why do you want to earn the passive income?

(2) How much passive income in a exact amount with a deadline do you desire?

(3) What are my available passive income streams options?

(4) What resources can you use to gather information to learn more about accomplishing your passive income goals?

(5) How to develop a written plan to get to where you want to be? Afterwards, then make the plan.

This is a framework I’m confident that could not only get you started but propel you to meeting your expectations. Lets look at this previously mentioned framework in action as an example.

I’ll use a made up character name John, who is ambitious but needs to organize everything so he can begin his passive income journey.

John desires passive income so he can have more time and freedom to travel the world with his family and be available to them more often.

This is John’s why or purpose. Next, John decides he wants to passive income that is three times his average monthly and annual expenses as a minimum but more preferably.

If his expenses are on average $1800 a month then his goal in the exact amount would be $5400 a month in passive income total as the minimum. $1800 multiplied by 3 equals $5400. $1800 was his average annual monthly expenses and his targeted passive income is $5400.

John is not sure how long it will take so he is aware it may not happen in a short period of time. John also understands he may even have to extend his deadline in the future if necessary.

John shoots to have his passive income goals accomplished in 5 to 7 years but knowing he will attempt to make it happen a lot sooner than his 5-to-7-year deadline.

John goes searching and finds resources that empowers him to make his goals more of a reality over time through content that’s practical.

Gather Passive Income Practical Learning Material

Some sources he will use and you can use these as well include: Passive income blogs/websites, the smart passive income blog, passive income MD, the college investor, martizesmith.com, entrepreneur, forbes, Inc, iwillteachyoutoberich, etc.

Other resources John decides to use are: Passive income communities on reddit, Facebook groups like “Financial Independence USA & Global”, takes advantage of free consultations no obligation talks with registered advisors, fiduciaries with no affiliation to brokers, passive income manuals or pdfs, business venture free courses and paid ones only if it gets you results, compiled list of passive income stream investment vehicles, etc.

John knows these are all great starting points and resources to use to help enhance and speed up the time it takes to fulfill his goals.

Case Studies on Passive Income

Before diving in checkout this case study on how David Weliver, founder of “money under 30” used blogging to generate passive income.

He made his passive income from blogging as I stated before and monetized by and through affiliate partnerships.

Another case study involves Jen Glantz, which appeared in a article by business insider. She earns passive income in the thousands of dollar range from sources like online courses and dividend stocks.

Moving on, next, John makes a written plan to help guide him on his journey.

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4 Step Written Plan Process

The written plan consist of 4 parts, which are: (1) Main goals (2) Resources (3) Math (4) Execution.

I’ll add that you have to develop business skills to and not just create a product or service and think it will sell itself.

Now as far as the 4 parts mentioned earlier lets take a further look as John is the example working through it.

John’s goals are as follow plus he would say these things and do them: (1) Main Goals. I earn $5400 in passive income by 2026 every month (your time frame may be different) (hear John assumes a 5 year deadline).

(2) Resources (A) John will get 10K hours of passive income content that’s practical from creditable sources but not limited to resources mentioned previously (B) John gathers case studies on how people have achieved passive income goals

(C) John lists all or most common to least common passive income vehicles (D) John decides on the exact method or investment that will provide the passive income stream.

(3) Math $5400/month is $64,000 a year. Find investment vehicles that you can use data and numbers to forecast future passive income streams.

For example, a S&P mutual fund index that averages 12% return on money John would need $540,000 in a S&P index fund generating 12% a year making him $64,800 annually.

So how does John save or make $540,000 in 5 years?

He can earn more and sell to get these numbers or he can and will have to increases his deadline time frame to 15 to 25 or more years total. John and also you, the audience, have to decide for yourself which direction to take.

If you sell or start a business you may have to make active income before passive.

If John consults and charges $1K he has to set his target then know the math to get to where he wants to be.

John aims for 50 clients in a year to make $50K but only got 15 that year making him $15K all of which is excess cash outside of his day job.

With his $15K in a S&P index fund at 12% return he makes $1800 annual or $150 a month in passive income.

Now, imagine he makes $15K, every year at the minimum, plus he saved $10K from his regular job that’s a total of $25K and keeping all things the same from the S&P mutual fund example he would make $3K annually or $250 a month in passive income.

Doing this over and over for decades and maybe even before then brings him closer to his goals.

The idea here is to use your brain and intelligence to get your goal as soon as possible.

If all John does is save from his salary that’s a slow way of reaching his goal unless he has a super high salary but most people don’t.

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Decide on an End Game or Final Outcome

I’ve provided a traditional way of John to meet his goals but John and you, the audience, have to think within and outside of traditional strategies to get your desired outcome.

A few ideas to get you thinking is to start a podcast, YouTube channel or use any platform to reach others to help you accomplish what you want.

The biggest thing is to be clear about your end game or end goal.

Since John has defined his end goal and can estimate or forecast the math or cash he would need to make his passive income streams possible he stands a higher chance of achieving it simply because he has clarity.

Lastly, it’s using intelligence because its all about the approach so one way is to use the S&P but if John wants to use real estate, buy-and-hold technique while fixing it up, then selling later and taking the proceeds to buy another real estate and repeat until his passive income stream goals met is another option.

It’s all about thinking different. The most critical part here is doing the math and keep rechecking it as you move forward with your pursuits.

Now is the execution, this is simply scheduling your activity daily or weekly to be in alignment with your goal.

Example, John is busy everyday but realizes he has a few hours he can work on passive income goals.

John decides to build his first income stream with real estate investing. John schedules every Monday and Tuesday for two hours 6pm to 8pm looking for investments in real estate.

On Thursdays and Fridays 6pm to 8pm John studies real estate financing options and strategies to use as well as gets quotes from lenders as he raises capital for real estate investing.

This is meant to get John and you, the audience, to set times and schedule activities to work on throughout the day and week with proper metrics and measures to gauge if progress is being made or not.

If you want to speed things up you must master your time and find more ways to free up time and work longer on your goals.

Below, I will list passive income vehicles to get you thinking about which one you want to start with first or expand if you already have other passive income streams.

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Passive Income Investments & Options to Explore