How To Start Making Passive Income From Scratch
- - How To Start Making Passive Income From Scratch
Martin DaskoAugust 27, 2025 at 2:21 AM
AleksandarNakic / Getty Images
Everywhere you turn, there’s someone talking about a new passive income stream that’ll earn you money with little to no effort. The biggest barrier to earning easy extra cash, however, is that you often need money to make money.
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It’s very easy to get discouraged when you think about how much it may cost you when creating a passive income strategy, but the good news is that you don’t need a lot to get started. Check out how you can start generating passive income from scratch right now, even if you’re new to the concept.
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Research Different Passive Income Streams
The first step of the journey involves researching different passive income opportunities so that you can decide which is the best option for your situation. There are multiple directions that you can take, ranging from renting out a parking space to marketing on social media. Here are a few examples to consider when deciding on passive income streams to pursue.
Rental properties. Real estate investing allows you multiple options for building passive income, from short-term rentals like Airbnb to finding tenants that pay your mortgage while you enjoy the appreciation.
Dividend-paying stocks. One of the simplest forms of passive income involves investing in stocks that pay dividends since you don’t have to do anything on your end.
Alternative investments. Investment options like REITs and crowdfunded real estate projects are becoming more common because they allow you to invest in real estate without becoming a landlord. You can start earning passive income with a platform like Groundfloor that allows you to start with $1,000.
Digital products. You can start creating digital products like eBooks that you sell on Amazon or printables for Etsy. Once you build up a following or a catalog of products, you can earn money 24/7.
Building an online business. This will involve you starting some sort of business that can range from affiliate marketing to building up a YouTube channel that collects ad revenue when you’re sleeping.
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Build Up Your Savings
While you need money to make money, you have to start somewhere. As you’re researching passive income streams, it’s essential that you start building up the funds.
Some passive income streams, like real estate or dividend-paying stocks, will require some capital to get started, so the sooner you start saving up, the better. If you don’t have the savings yet, you can save up the earnings from another passive income stream or side gig, like selling digital products or building an online business with time and effort.
Once you have saved up enough of a cash cushion, all you have to do next is pick which passive income idea you want to do.
Invest In Your Passive Income Stream
Once you’ve decided what you’re going to invest in, it’s essential that you get into the habit of investing time and money into this stream until it’s substantial. The first few product sales or dividend payments won’t be that significant, but with time and additional funds, you could turn these passive income streams into something considerable.
Final Take To GO: Taking the First Step
You can start today with limited funds if you haven’t built up any passive income yet. The key is researching different passive income streams to determine which would suit your lifestyle and goals.
As you’re researching different passive income streams, such as creating content or peer-to-peer lending, make sure you are doing what you love and not just the newest option being hyped. Here are a few general rules to keep in mind when building passive income from scratch:
You can start with just a few dollars. You can invest in crowdfunded real estate or sell your own digital products on Etsy with limited funds.
If you don’t have much money, you will have to rely on effort and time. Putting in the time up front will allow you to bring in more money in the future passively.
If it sounds too good to be true, it always is. We must remind you that if a passive income stream you read about seems unrealistic, it usually is.
It takes time to build up a decent stream of passive income. The first few dividend payments may not be all that exciting, but as you keep investing more, you’ll see your payments increasing.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: How To Start Making Passive Income From Scratch
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