Ways to Create Passive Income on a Tight Budget

You don’t need deep pockets to get streams of passive income flowing. Here’s how anyone can “set-it-and-forget-it.”

Ways to Create Passive Income on a Tight Budget

We’ve all seen the infomercial at 2 a.m. starring the dude relaxing in his mansion who claims he was once broke and wants to show you how to get rich doing almost nothing. Sorry to break it to you, but no matter how many of his foolproof kits you buy for just three easy payments of $99.99, there’s a good chance you’ll leave that transaction $300 lighter and none the wiser.

Don’t close out this tab in disgust just yet. There are ways to create income streams that earn you money while you’re eating, sleeping, working out and… well, you get the point. Known as passive income streams, these revenue generators require one-time setup and minimal ongoing work to earn you money.

Will you get rich from a passive income stream? Possibly, but not likely. Instead, these passive income streams create small puddles of cash you can combine into one larger pool — or maybe a kiddie pool — that you can save.

Here are 12 passive income streams you can dive into without a huge investment of money or time.

Lose Weight and Fatten Your Bank Account

App developers can gamify just about anything these days, and fitness is one of the newest areas app creators have tapped into. Some fitness apps, like HealthyWage, will reward you with real money for hitting your weight-loss and fitness goals.

So, if you’re already at the gym sweating out those couple pounds you packed on while posted up in your cubicle eight hours a day, you might as well download one of these apps and turn those pounds you shed into a passive income stream.

Small-Money Investing

People have bought and sold stocks and securities for hundreds of years to protect and grow wealth, but the days to handing burlap sacks of gold coins to monarchs are over. The age of the smartphone has put the power of affordable investing in your palm.

New microinvesting apps crop up regularly, giving people who want to invest but lack loads of cash the ability to invest as little as a few bucks at a time. Also, these apps have tiny fees, if any at all, and the behind-the-scenes growth can sneak up on you.

I can’t stress enough how entertaining it is to watch your $10 per week grow into hundreds or thousands of dollars without tons of work on your end.

Automatically Round Up and Invest Spare Change

So, maybe investing a fixed dollar amount every week is outside your comfort zone. There are other apps like Acorns that forgo scheduled withdrawals and turn penny-sized transfers each time you swipe your credit or debit card into a passive income stream.

How these apps work is they round up every purchase you make to the next dollar and put the rounded up cents into an account. Once that account reaches a certain dollar figure — generally $5 or $10 — the app automatically invests that cash according to your preferences.

That once-a-week $10 withdrawal may worry you, but you’ll likely never notice those 200 5-cent round-up charges last week. At least you won’t notice them until you see that fat wad of cash sitting in your investment account and the interest it’s gained.

Launch an Affiliate Marketing Gig

While a lot of brick-and-mortar retail stores are packing up and locking their doors for good, the online retail space is still competitive and thriving. Because of growing competition, online retailers will pay people with a web presence a commission to send buyers to their online storefronts through affiliate programs.

There are many affiliate aggregators online that give you easy access to thousands of smaller retailers’ affiliate programs, but the big bucks come from teaming up with retailers directly. Just do an online search for a big retailer’s name and “affiliate,” and you’ll likely turn up the company’s affiliate program.

To maximize your profits and likelihood of being approved for affiliate programs, only apply for affiliates that match your web presence. For example, if you have a voice in the automotive space, sign up for an affiliate program for a car parts store. Once the company approves you for its affiliate program, promote your personal affiliate link via you preferred content-delivery method — YouTube videos, social media or a website — and watch that passive income roll in.

Take Your Passion Online

Everyone has a passion, so why not turn yours into some passive income?

When you turn your passion into a money-making project, it’s a double dip into the cup of satisfaction — and there’s no one around to yell at you for double dipping.

Do you have a knack for photography? Go out there and snap amazing photos to your heart’s content, then sell those images through any of the online image databases. Do you love to paint? Create a satisfying masterpiece and put that bad boy on eBay or an artist marketplace to turn it into profit. Whatever you are passionate about, there are often ways to turn it into passive income.

Earn Cash With Rewards Credit Cards

Credits cards get a bad rap. Everyone gripes about being elbows deep in debt and paying outrageous interest fees, but did you know you can flip this on its ear and have the credit cards paying you?

Simply sign up for a rewards credit card that allows you to redeem your points for cash or other useful things like gift cards or statement credits, and use it everywhere that accepts plastic.

Paying your electric bill? Use the card. Buying groceries? Use the card. And so on.

Over time, you’ll see those rewards stack up to the point where you can redeem them for hundreds or even thousands of dollars in gift cards, travel credits, goods or statement credits.

Remember one thing, though, you must avoid all interest charges by paying your statement balance in full every month. Even one month of interest charges can wipe out months passive income you’ve generated just by swiping your card.

Maximize Cash Back With Rewards Shopping Sites

Oh, and while you're using that rewards credit card to buy things, make sure you use rewards shopping sites to double up on your cash back. Sites like Ebates and TopCashback will transfer a small percentage of your total purchase — generally 1 to 5 percent — into a rewards account just for buying items using their special links.

If you use these special links every time you buy something you would normally buy, you are padding your rewards account. Once that account hits a certain balance, you can cash it out for a check or gift card.

Pro tip: Only use these sites to buy something you normally would. Do not fall victim to their marketing schemes to get you to buy stuff you don’t need.

Get Into Real Estate (the Cheap Way)

Want to be a real-estate mogul but lack a billion-dollar bank account or a rich parent to float you a small loan? Crowdfunding may be right up your alley.

Crowdfunding is when a group of real-estate investors pool their assets to buy one expensive piece of real estate and split the profits. Normally, that would require friends in high places, but new crowdfunding sites like Fundrise make it possible for virtually anyone to get in on the real-estate market.

These sites will let you start with as little as a few hundred bucks, and you get to pick what projects to put your money behind, whether it’s remodeling a skyscraper in Malaysia or breaking ground on a new housing development in the New York City suburbs.

Like standard investments, your passive income comes in the form of increased share value and quarterly dividends. What’s more, you make this money without lifting a finger (except to click your mouse a few times).

Rent Out Your Spare Room

Did your kids recently leave the nest? Did you get stuck renting a place that had an extra room or two? Instead of blowing cash to turn that space into a killer wet bar or game room, turn it into a passive income machine.

List that extra room on one of the countless short-term rental sites like Airbnb or VRBO and let temporary tenants help you pay the bills (unlike that lazy teen you raised). There are precautions to take like locking up valuables and setting up the space to be as hotel-like as possible, but those are small investments of time and money to get the dollar bills rolling in.

This is especially valuable if you live in a high-demand vacation spot or a popular city with a pricey housing market. For example, the average price for a private room in San Francisco is $124 per night. If you can keep that room filled for 15 days per month, that’s a cool $1,860 per month in passive revenue.

Write an E-Book

Got entertaining stuff on the brain that you want to get out to the world? Why not toss it in an e-book and turn it into a passive revenue stream?

While traditional publishers may turn their noses up at the thought of publishing a book by an untrained writer not named Kardashian, many e-book publishers are fine with your inexperience.

Services like Amazon’s Kindle Direct Publishing make it relatively easy for unknown publishers to push out e-books and earn up to 70 percent in royalties with minimal ongoing work. That’s a sweet deal considering you don’t have to pay a dime for publishing.

Like other creativity-based passive-income streams, you first have to find a genre you’re an expert in, have an existing following in or you can make very entertaining. With that genre in mind, you can pound out a 20,000-word e-book in a few weeks while sipping margaritas on the beach.

Keep in mind, if you’re not an experienced editor, it’s a great idea to shell out a few bucks to have one look over your e-book before releasing it into the unforgiving jungle known as the internet.

Open a High-Yield Savings Account

In the era of low-overhead online banks, high-yield savings accounts are becoming more common. Sign up for one of these accounts and dump any extra cash you have into it. Over time, you’ll see that 1.5 or 2 percent interest add up to big bucks.

Keep in mind, though, this is a slow-burn way to earn passive income, but if your bank offers automatic scheduled transfers, it is the perfect set-it-and-forget-it way to earn extra hands-free cash.

If you want even higher yields and can go without a set amount of money for a longer period, you can open a certificate of deposit account. These CDs require you to tuck money away for a set amount of time — usually a few months to a few years — but you can earn double or triple the interest relative to a normal savings account.

Become YouTube Famous

The interwebs is chock-full with funny cat videos, so why can’t you (or your pet chinchilla) be YouTube stars too? Think long and hard about what you are great at or just enjoy the heck out of doing and find a way to turn that into quick videos. There’s no need to worry about professionally edited videos at this point — your knowledge or personality will easily make up for any editing snafus.

Once you get a few videos online and grow a small following, go into your account settings and click that “monetize” button. This allows YouTube to put ads before, during or after your video that generate revenue you and YouTube split. You may not make a killing immediately, but a few hundred bucks a year in passive income from a few videos is attainable.

Quick tip: Be unique. Sure one guy’s vlog about the underwater breeding habits of the sea cucumber may get millions of views, but that doesn’t mean you should copy him.