Passive income is often seen as the holy grail of making money. Making money from work that’s already been done? Without having to do anything? Making money while you sleep? It’s the dream for many! There are so many ways to make passive income in the UK.
You may have heard of the idea that millionaires have 7 streams of income. For example, they may have earned income from their full time job, where they are exchanging time for money. However, they will then also make money in 6 other ways in addition to that! We all have limited amounts of time, and so to have multiple streams of income, it’s essential that some of them are passive income streams.
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What is passive income, exactly?
Passive income can be defined as income where you put in little to no effort to make or maintain. It is often income that is accrued from pre-existing work, work that has already been completed, or investments.
It’s a way of earning an income where you are not trading time for money (also known as active income). It’s worth noting that passive income streams may take a while to set up, or may take some time to generate regular income. Passive income is certainly not a way to get rich quickly. In fact, many passive income streams will mean that you will have to spend some time creating work in the first place, or building up sums of money to invest.
It’s something that you’ll have to work hard at. But it’s all worth it when you can say that you are making money while you sleep!
Is it really possible to create passive income streams in the UK?
Yes! You don’t already have to be a millionaire to create passive income streams. It is possible to create passive income streams as an average earner, especially if you are willing to dedicate time and effort into creating these streams.
When you have a side business or side hustle, this can be a great springboard on which to launch passive income streams and think outside the box. For example, if you are a midwife who side hustles as a hypnobirthing coach, you could create a hypnobirthing online course which could create a passive income stream. You create the course once, and then can passively create income from this course for years to come.
Passive Income Ideas UK
Now let’s dive in and consider some of the awesome passive income ideas that you could be putting into practise in 2021. Passive income does take work and dedication, but it’s so worth it when it comes to increasing your wealth both now and in the future.
Often, passive income can mean that your existing money can generate more money, particularly when it comes to interest and dividends generated from investments. It’s an exciting concept to explore, especially in relation to early retirement. When you’re investments are generating enough money so that you don’t have to work in a traditional job anymore? You can become ‘work optional’ and choose whether you would like to continue to trade your time for money anymore.
Now let’s get started on these ideas…
Rental income on property
When we think of rental income, we may often think about this in terms of an investment property. Purchasing a Buy To Let investment property is certainly a way to create passive income, especially if you are using a letting agency to do so. However, this is not the only way to create passive rental income.
You can also generate passive income from renting out a room in your home to a lodger. If you have a spare room in your house this can be an excellent way to generate a passive income. Even if you were to have a lodger staying with you for one year, this could be an excellent source of additional income. Sure, it’s not for everyone to share their house with another person who is not part of your family. But if you’re willing, this is a no-brainer for anyone who would like a regular passive income stream.
In the UK, there is a scheme called the Rent a Room Scheme– this lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home.
Airbnb is another great way that you could earn a semi-passive income from your home. Whether you rent out a room, or your entire property, this could be a great middle ground for anyone who would prefer to have their own space most of the time. I note this as a semi-passive income due to the fact that there is some logistics to sort out such as replying to messages on the platform, and arranging cleaning for the room or property after each guest has stayed.
Sell digital products
Like I mentioned earlier, selling digital products can be a brilliant way to create a passive income stream. Digital products can cover a whole lot of different ideas, but some of the main products might include a course, a membership website or printable downloads.
For example, your course or membership website could be related to a topic that you have specialist knowledge on. This is likely to be an extension of a side hustle or business and will usually require an existing audience that you are then able to market your product to. An excellent way to host a course is by using a site such as Teachable.
A printable download could be anything from artwork, to a daily planner. Once you have created the item, you can list the product on a website such as Etsy (take a look at my guide to getting started on Etsy), and then your customers can download and print the product themselves. The only effort on your part is to create the products and set up your store.
Print on demand
Print on demand is similar to selling digital products. However, your customer will end up with a physical product. It works on the basis that you create a design, upload it to a printing service website such as Printify, select your printers, and then upload the item to an online marketplace such as Etsy.
You can create print on demand products for almost every item you can think of- from tshirts, to socks, to mugs and cards and more. When your customer purchases a product, the order automatically goes directly to your nominated printers, and they deal with the packing and delivery of the product. You don’t have to lift a finger.
Check out my full guide to Print on Demand in the UK to find out more.
Publishing an eBook
Publishing an eBook of course takes some upfront effort to create the content, however once it is complete, it will require no further effort from you. The topic of your eBook will obviously vary depending on your own area of expertise and interest. Both fiction and non-fiction eBooks can be a great source of passive income when listed on Amazon.
Listing your eBook on Amazon also means that you have access to customers all over the world! There are endless numbers of customers who could potentially purchase your book.
Make sure that your cover is enticing and engaging. Although you could hire someone to create a cover for you, you could also create your own using a service like Canva. This is a site with lots of pre-made templates that you can tweak for your own eBook cover. Use their 30 day free trial to gain access to all of their features.
Interest and dividends on investments
Investing is without a doubt one of the best ways to increase your wealth passively over the long term. Essentially, when you invest, it usually means that your money is making more money! This is important as this is an entirely passive income stream that can run alongside your other income streams without any upfront work involved (other than to make that initial money in the first place of course!)
You can start investing from as little as £1 with a trusted provider such as Wealthify. Investing regularly over the long term is a great way to invest, and when you invest in a Stocks & Shares ISA, the returns on your investments are tax-free.
Use my referral code for a cash bonus £25 when you sign up and invest with Wealthify (sign up bonus will be attributed once investments reach £500).
*Capital at risk
Ad revenue
If you wanted to start a blog or YouTube channel, a popular way to make passive income from this is from ad revenue. There are several ad networks that you can sign up to, in order to place ads on your blog or YouTube channel.
Some networks require you to have a certain amount of traffic before accepting you onto their programs, but if you are focused on building your traffic to your channels, you will most likely reach these limits before long.
Popular ad networks include MediaVine, Ezoic and Google Adsense.
Ad revenue can vary wildly depending on the time of year, the niche that your channel operates in, and the number of ads you allow on your channel.
If you run a blog or YouTube channel ad revenue is a great passive income stream as it allows you to gain some income from the content you have already created. Coupled with other passive income streams such as affiliate marketing and digital courses, these channels can create a healthy amount of passive income.
Affiliate marketing
Affiliate marketing works on the basis that when you recommend a product or service to your audience through an affiliate link, and someone uses it, you receive a small commission at no extra cost to the user. Commissions are usually a small percentage of the overall cost of the product or service, and so this passive income idea works best when a high number of people are clicking through the link.
To create affiliate links, you will need to sign up to affiliate networks such as AWIN, which has lots of different companies listed on their network. Or, you can sign up to be an affiliate of individual businesses. Usually if you Google a company name followed by ‘affiliate program’ afterwards, you will be able to find out how to sign up.
Again, if you have a website, blog, YouTube channel or social media page, affiliate marketing is a great way to monetise these channels and generate passive income.
Sell photos or videos
Sell photos
If you’re a photographer by trade, or even if you’re a passionate about photography as a hobby, you could be making a passive income from your photographs. High quality imagery is more in demand than ever as more and more business move online.
Many website owners do not have the time or skills to create their own imagery. This is where you can come in. You can either sell your stock photos individually or create bundles of themed images that you can sell again and again to multiple customers.
If you’d like to make a passive income from your photos, you could list on sites such as Shutterstock, YayImages or Dreamstime.
If you’re a skilled photographer you could combine this passive income stream with another of the above ideas such as creating tutorials for YouTube and receiving ad revenue and affiliate income. You could even create a photography course and market this through a YouTube channel too!
Sell videos
We consume video content now more than ever before, and video content is highly in demand by those who may not have the time, skills or equipment to record videos themselves. If you already have a YouTube channel, why not make further passive income from your skills? You can upload your stock videos to sites such as Pond5, Storyblocks, Vimeostock and Adobe Stock.
That said, you don’t have to be a videographer in order to sell your videos and create passive income. News websites will pay handsomely for your videos- even if you’ve recorded them on your phone. Whether you’re at a festival, a demonstration or public event, your video could be used to accompany a news article on a popular website.
Head to sites such as Newsflare or Rumble to upload your videos.
Cashback
Although cashback isn’t exactly a passive income stream, it’s a great way to generate extra cash or rewards when you spend money that you were planning on spending anyway. It’s a no brainer to be using a cashback rewards service in some way whenever you are spending money.
Cashback websites & apps
Two great cashback websites in the UK are TopCashback and Quidco where you can get cashback when shopping online at hundreds of different retailers. You can also get cashback from these sites on purchases such as insurance, travel, and hire cars.
You can also receive more cashback at selected retailers when you use Airtime Rewards. Airtime Rewards gives you cashback on your purchases and takes this off your phone bill. You can receive cashback from retailers such as Boots, Wilkos, Argos, Matalan and lots more.
You can connect your debit card to the Airtime Rewards app, and instantly receive cashback. There’s no need to complete your purchase within the app itself. Use my referral code 9F333XJG, to get 50p to get started.
Cashback using credit cards
When used carefully, and paid off in full each month, credit cards can be an excellent way to accrue rewards and cashback through everyday spending. My favourite is the no annual fee British Airways American Express card which rewards you with Avios points when you spend. Free flights and upgrades?! It’s a no brainer. You can also redeem cashback offers at all kinds of different retailers and establishments- from fashion, to hotels, to food.
Get 6,000 Avios points with this link when you spend £1,000 or more in the first 3 months of using the card. Usually, you would receive 1 Avios point per £1 spent so this is an excellent sign up bonus. Using the British Airways Amex card is an excellent way to gain points and rewards on your everyday spending. Just remember to pay the balance off in full each month to avoid paying interest.
Royalties through music and jingles or voiceovers
You can generate passive income through royalties gained from audio. It’s a great way to make passive income if you’re a podcaster, musician or singer. You can create tracks and then license them out through websites such as Audio Socket, Sound Cloud and fyrfly.
If you do some research before recording your tracks, you can write something that’s very much in demand, and appealing to lots of different audiences. Ideally the more commercial the track, the better, in order to get it licensed as often as possible.
11. Renting out your car or parking space
Did you know that you can make a passive income through your car? There may well be times when your car is not in use and it could be making you money. In fact, you may even be able to pay for some of the costs of running your car, simply by renting it out to others. Pretty cool, right? Check out Turo to start renting out your car. Turo reckons that people can make an average of £574 per month by renting out their car when it’s not in use! It’s completely free to list your car on the platform, and it’s up to you to decide your own daily price and ground rules for the car.
If you live in a city or in a commuter town, you may also be able to make a decent passive income through renting out your parking space. In London and many of the surrounding commuter towns, a parking space is like gold dust, and people will pay a premium to park their car in a convenient spot every day. Start by listing your parking space for free on Your Parking Space, and set your own prices and availability. The site also has a really handy ‘earnings calculator’ which allows you to input your location and find out how much you could earn from your parking space each year.
You could also try JustPark which again allows you to list your parking space for free on their website. JustPark has over 4.5 million registered users on the site, so you should have no shortage of customers, no matter where in the country you are living.
12. Rent out storage space
Storage is always in extremely high demand- whether it’s from students, those who have moved abroad, or those who are in the process of moving house. People tend to own lots of stuff, and they need somewhere to put it until they are settled in a long-term home with enough space. When it comes to storage space, you could make a generous passive income from renting out your garage. Whether your garage is completely unused, or whether you have a spare section where you could hold some items for someone- you can make money from this space.
You can think of it as Airbnb for clutter, if you like! Check out Stashbee to list and rent out your free space.
Another way to generate passive income through storage is to invest in a self-container storage unit yourself, and rent this out as a passive income stream. This idea of course requires some up front cash investment, but is likely to be a lower cash investment than an investment property, for example.
Passive Income UK- Final Thoughts
Implementing multiple passive income streams is one of the best things you can do to stabilise and diversify your income. Rather than relying on one income stream from an employer, you can take things into your own hands and protect yourself with a plan B, C and D! You won’t look back once you’re making money in your sleep.
Good luck! Follow along @thriftylondoner on Instagram to get the latest updates on making money on your own terms.
As an expert in the field of passive income and financial strategies, I can confidently affirm that the article provides a comprehensive overview of various passive income concepts and strategies. The content is well-structured, offering insights into the definition of passive income, its feasibility in the UK, and a variety of passive income ideas. Now, let's delve into the key concepts covered in the article:
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Passive Income Definition:
- Passive income is income earned with little to no effort on the part of the recipient.
- It is often derived from pre-existing work, completed tasks, or investments.
- Passive income does not require active time-for-money exchange, unlike traditional active income.
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Feasibility of Passive Income in the UK:
- The article emphasizes that it is indeed possible to create passive income streams in the UK for both average earners and those with side businesses or side hustles.
- Dedication and effort are highlighted as essential components to successfully establish and maintain passive income streams.
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Passive Income Ideas in the UK:
- The article provides a list of diverse passive income ideas applicable in the UK context.
Rental Income on Property:
- Buy-to-Let investment properties are mentioned as a common way to generate passive income.
- The Rent a Room Scheme in the UK is introduced as a means to earn tax-free income by renting out a room in your home.
- Airbnb is suggested as an alternative for earning semi-passive income through short-term property rentals.
Sell Digital Products:
- Creating and selling digital products like courses, membership websites, and printable downloads are presented as a way to generate passive income.
Print on Demand:
- Print on demand services are introduced as a method to sell physical products without dealing with the logistics of packing and delivery.
Publishing an eBook:
- Writing and publishing eBooks on platforms like Amazon are highlighted as a way to earn passive income.
Interest and Dividends on Investments:
- Investing, particularly in Stocks & Shares ISAs, is recommended as a long-term strategy for passive income.
- A referral code for Wealthify is provided for those interested in starting with a low investment.
Ad Revenue:
- Generating passive income through ad revenue on blogs or YouTube channels is discussed, with mentions of popular ad networks like MediaVine, Ezoic, and Google Adsense.
Affiliate Marketing:
- Affiliate marketing is explained as a way to earn commissions by recommending products or services through affiliate links.
Sell Photos or Videos:
- Photographers can earn passive income by selling stock photos on platforms like Shutterstock, YayImages, or Dreamstime.
- Video creators can sell stock videos on platforms such as Pond5, Storyblocks, Vimeostock, and Adobe Stock.
Cashback:
- Cashback, while not strictly passive income, is suggested as a way to generate extra cash or rewards when making planned purchases.
- TopCashback, Quidco, and Airtime Rewards are recommended cashback services.
Royalties through Music and Jingles or Voiceovers:
- Musicians, podcasters, and singers can earn royalties by licensing their tracks through platforms like Audio Socket, SoundCloud, and fyrfly.
Renting Out Assets:
- Renting out your car through platforms like Turo is mentioned as a way to make passive income.
- Renting out parking spaces and storage space are presented as additional avenues for passive income.
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Final Thoughts:
- The article concludes by highlighting the importance of implementing multiple passive income streams to stabilize and diversify income.
- The idea of having a plan B, C, and D is advocated for financial security.
- The author encourages readers to follow along on Instagram for updates on making money on their terms.
In summary, the article offers a comprehensive guide to passive income in the UK, covering a wide range of strategies and providing practical advice for individuals looking to create additional income streams.
