Passive income: What is it and how can you get started?
Side hustles are common, but they can be a lot of work. But is it really possible to make a living on passive income?
Charlie Chang and Rachel Richards are both living the dream of quitting their day jobs and living off the money they don't have to work too hard for. But both say it took a lot of work up front to get to this point.
Chang has a YouTube channel on personal finance, and now earns about $2 million a year in what's called "passive income."
"Most of my passive income comes from my YouTube channel," he said.
The personal finance guru says he grew up super frugal, and that's how he learned to care about money. He says one of the best ways to earn passive income is to start a business from scratch online. Chang's method is to make videos about investing in stocks for beginners, uploading them online, and watch a percentage of revenue from YouTube ads roll in.
"YouTube sells ad space on my video sand they take a 45% cut of that revenue and pay the creators 55%," he said. One video on investing in stocks has generated $200,000 all on its own.
But not all passive income is earned online. Richards is an author and investor who bought her first rental property with her ex-husband in 2017. As a former financial planner, she kept getting questions about finances — so she self-published "Money Honey" on Amazon, and it has since become a best-seller.
Writing a book is one of her passive income streams, but it also opened the doors to other opportunities, such as paid speaking jobs.
"The way I define passive income is it's money earned with little to no ongoing effort," Richards said.
And while passive income sounds easy, Richards says people should know that a lot of time or money will be needed at the outset — along with a lot of passion. And all that hard work doesn't necessarily guarantee success, according to Chang.
Both entrepreneurs say it took a couple of years of hard work before they were able to quit their day jobs and live off the money still coming in.
"I was only able to do that because I really love personal finance. If I didn't love it I would have stopped way way way sooner," Chang said.
