Freelance work can be unpredictable, especially when you’re just starting out. Uncertainty about your income can be overwhelming, stressful, and make it difficult to stay on track. However, passive income is a powerful way to supplement your primary freelance earnings so you can maintain financial stability through the ebbs and flows of your freelancing career.
Definition: Passive income is income that can be earned automatically or that requires minimal effort to earn or maintain.
Passive income can include things like rental income, investing in stocks, selling products and content, or even advertising revenue. However, generating “passive” income often requires upfront work before the income becomes truly passive.
For example, you’d need to create and publish a book or video before people can start paying you for it. Once you’ve established passive income streams, you’ll have a safety net for when your freelance pipeline is limited.
If you’re freelancing and finding yourself with unpredictable income, here are 4 ways to fill the monetary gaps you might experience from time to time.
Repurpose Unused Work
I’ve repurposed old or unused designs, code snippets, and 3D graphics throughout my career to strengthen my portfolio or resume or to sell on stock marketplaces. This is often the quickest and least risky way to generate passive income.
Maybe you started a project and didn’t finish or your client chose not to use your work. You can usually make edits and updates to quickly turn old work into valuable assets that others are willing to purchase.
For example, maybe you designed a website or interface that has since been redesigned by an old client. You could update the design and sell components of it on a stock marketplace. If you’re a copywriter whose article was denied by a publisher, you can edit the piece and repurpose it for another publisher.
If you’re in the financial or business industry, maybe you have a project plan or budgeting tool you made for a client and can tweak it to work for another client.
It usually doesn’t take much effort to repurpose old work, but once it’s completed, it can generate recurring passive income with minimal maintenance.
Rental income is one of the oldest and most reliable forms of passive income. It’s a common cliche that you have to spend money to make money, and rental income is a great example of this.
While there are costs associated with owning a rental property, this is an effective way to earn passive income with minimal effort. However, it’s important to keep in mind that this makes you responsible for being a landlord.
Although investing in real estate can be a straightforward way to earn passive income, you have to make sure you can rely on the tenants, coordinate maintenance and repairs on the property, and potentially hire and pay one or more staff members to help you with that work.
Perhaps the most effective way to manage a rental property is to hire a property manager who can handle the day-to-day operations for you. Then, you can focus on your freelance work and get a portion of the profits with minimal effort.
If done correctly, the rental income from the tenants will cover the cost of the property, pay a property manager, and still bring in profits for you.
Invest In Stocks (and Crypto!)
One of my personal favorite passive income strategies is investing in stocks and cryptocurrency. This is where you’ll invest a portion of your active income (such as your salary) into stocks or crypto. While a return on investment can never be guaranteed, this is one of the best ways to build long-term wealth.
There are many platforms that let you buy and sell stocks, but by far my favorite platform is Public. It features a unique social component that lets you see what others are investing in, comment on trades, view news, or follow market trends! The app is visually stunning, intuitive, and it makes investing simple and fun — even for first-time investors!
Investing in stocks can be risky, but a potentially fruitful form of passive income. In terms of the risks associated with the stock market, Public.com explains that investment risks exist, but like anything else, investing takes time to learn and you’ll become better over time.
There are also many financial advisors who can help you determine the appropriate risk level and how much you can afford to contribute based on your current financial situation.
When you’re just starting out, it’s helpful to note that there are many different types of stock investments. There are common stocks or preferred stocks, domestic or international, growth or value, or penny stocks – which you may have heard of if you’ve seen The Wolf of Wall Street – just to name a few.
These different types of stocks offer different levels of shareholder value or different returns, so knowing these key differences can help you decide what type of investment is best for you. Also, consider the sector in which you are looking to invest. For example, you may feel more inclined to invest in a technology or healthcare company versus consumer staples or real estate.
Take the time to research what types of investments make the most sense for your financial means. Then, create an investment plan that will ultimately pay off for you. It can take a long time to see a decent return on your investment. But with patience and smart planning, you’ll develop a strong investment portfolio to leverage if you find yourself in need.
My best advice? Always research before you invest, and never invest more than you’re willing to lose.
While content creation does require upfront work, it is perhaps the truest form of passive income. Once the content is created, it can help you earn passive income for years with little or no effort. You can gain exposure, increase your following, and establish a reputation in your field with this strategy. That means you can also consider it an investment in your personal brand.
Creating an online course can be a great way to boost your reputation and earn extra income. Set a competitive price and sell access to the course once you’ve finished creating the materials. There will be minimal work needed to maintain that stream of income.
Writing an e-book that gives advice to others in your field is another popular type of content. Depending on how quickly you could finish it and assuming it sells well, that could also be a great way to establish your professional repertoire and bring in passive income simultaneously.
Freelance work can be unpredictable, intimidating, and risky. That can make it difficult to freelance rather than work for a company and earn a consistent paycheck.
However, if you establish yourself in your field and plan ahead, freelance work can be extremely rewarding.
Passive income can offset financial shortcomings and act as a safety net. That can ease the financial stress associated with freelancing and help you stay on track for a successful career.
Last updated on May 18th, 2022
About Matt Olpinski
Matt runs his own web design and development company Matthew’s Design Co. and teaches thousands of freelancers how to succeed through his personal blog, newsletter, and community for freelancers — The Freelance Institute.