In the past two weeks, we have discussed the cost of raising a child and active income for parents, today we can discuss some passive income for parents, especially for stay at home parents. They are all tested and workable!
Deciding to become a stay-at-home parent is not that easy. Yes, you spend more time with the kids, but you also have to manage household chores. National Father Initiative reveals that 7% of fathers and 28% of mothers in the USA opt to stay at home despite the challenge. But, if you’re a stay-at-home parent who wants to contribute to the household, set up passive income.
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- The Cost Overview of Learning Music
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Table of Contents
What is Passive Income?
Investopedia defines passive income as earnings from another source you’re not involved actively. With that said, you’re not putting too much effort to maintain that income stream. Some people called “get paid while you are sleeping”.
US Census Bureau reveals that 20% of American households get passive income from 3 sources, dividends, interest, or rental properties. The passive income is typically generated from the following four ways:
- Money Investments: you can use money to generate cash flow, such as stock, ETF, crypto currency
- Asset Investments: you can acquire an rental properties to earn money, for example, vacation house, apartment etc.
- Asset Sharing: selling or renting your own properties, either car, house, room, garage etc.
- Knowledge Sharing: It’s easier than ever for educators to sell their knowledge online by courses, Udemy, YouTube, Instagram, Facebook etc. You can create pre-recorded courses and start selling with few limitations.
The Best Passive Income Way for Parents
Compare with others, parents’ schedule is chopped into small pieces. They only got “fractured time”. They need to prepare breakfast, drop kids to school, picked them up, send them to extra curriculum, prepare dinner and put them in bed. That is the only daily routines without any unexpected illness.
Related Reading:
- 9 Way to Help Stay at Home Mom Depression
- Being a Stay at Home Dad – 10 Benefits and Challenges
- 11 Tips for a Meaningful Summer Holiday for Both Kids and Teens
- How to Get a Toddler to Sleep: 9 Ways to Help Child Rest
So, what could be the best legitimate passive income opportunities for parents?
Asset Sharing
1) Short-term Home Rental During Vacation to Another Family
If you are planning to a summer vacation with kids, you can rent out your home to other family while you’re out of town. Therefore, both of the families do not have to carry so many children stuff and can save lots of troubles.
Short-term home rentals are so popular that there are a total of 12.7 million Airbnb listings globally. 2.5 million of these come from the North American region in December 2021. You can either list your home on the Airbnb site or other alternative sites like TripAdvisor and Agoda. Personally, many people post a short information on Facebook and they got introduced via friends or group.
The major risk here is having tenants damage your property and you need to have an insurance and always charge a deposit.
2) Renting Out an Unused Space in Your Home
If you have another extra room available, instead of renting to another person, you can rent out a room for storage instead. There’s no need to build a self-storage facility to enter this storage rental business. Just list the room as a storage rental space on apps like Neighbor.
From simply renting out an unused room, you can already earn about $100-$400 a month! You’ll then automatically receive these payments in your bank account. The best part is, you get host liability protection as well the moment you enlist your space on Neighbor.
3) Car Rental or Sharing
One winter, we went to ski and our car key lost on the mountain. Our new car key takes 2 months to deliver due to weather conditions. Therefore, we have to rent a car for the daily life. Thanks to SnappCar that I were able to find a neighbor who is renting his second car out. Renting out your car when you’re not using it has the same concept as renting out your home on Airbnb. You don’t have to buy another vehicle for a stranger to use.
Simply list out your car on car rental sites like Turo. Then, set up your rental fee, and the site will do the rest — marketing and 24/7 customer support included.
On average, 1 car listed on Turo earns an average income of about $10,000 annually. To increase your annual income, you can add more cars to your portfolio.
The only major risk is having your guests damage your car. But, most car rental sites have host protection plans in place. Some even have liability insurance in case your car incurs physical damage.
Knowledge Sharing
4) Selling Stock Photos or Paint Online
If you’re already into photography as an active income source, you can sell them as stock photos. Pixpa defines stock images as photos taken by photographers available for commercial use. They’re also subject to usage licenses.
But, before you take photos, research your target market and the image types that have a high demand. You can even take a look at magazines to have a further idea of what photos your target clients will buy.
Once you find your niche, start taking photos! Just make sure that the images you get are sharp and of high quality. No post-editing should be needed.
Here are the pointers you have to take note of when taking photos:
- Should be bright and clean
- Images should be full color
- Photos should be well-lit
- In sharp focus
- Is appealing to the masses
Once you have your needed images, search for the best stock photography websites. Sign up to become a contributor to that platform. After the platform has approved your application, license your photos. You’ll then receive a commission from the platform for every image download.
Usually, you’ll earn at least $0.20-$10 for every royalty-free stock image per time.
5) Open an Online Course
Related Reading:
- 8 Tips to Teach Kids to Save Money
- Best Way to Save Money for Kids: 8 Tips Every Parent Should Know
- Teach Teens About Money (including credit card and mobile app)
- 10 Best Ways to Teach Kids About Money
Are you good at teaching or explaining difficult subjects in a simple manner? You can create an online course to earn passive income. If you are knowledgeable in a particular subject, you can easily create and sell an online course or an eBook.
Sites like Udemy, Skillshare, Teachable, and Kajabi are excellent places to start.
Asset Investment
6) Vending Machines
Vending machines may not be new, but this low-maintenance business is a good passive income source.
If you look at the statistics, 6.9 million vending machines are found in the USA alone. But, if you research what products to sell and where to place the machine, you can earn a good income.
Forbes Advisor even lists out the benefits one can have from setting up vending machines.
Vending machines can cost between $50 to $10,000, depending on the machine type and products you’re selling.
You can always buy the new ones, but if you’re strapped for cash, refurbished ones are also great. Refurbished vending machines cost between $1,200-$3,000.
Don’t forget to factor in the inventory cost and the repair and maintenance costs. After all, a broken machine means lost revenue.
Once you’re good with your initial costing, set your machine up and leave it. Then just come back after, let’s say, every 2 weeks to restock and cash it.
7) Investment Real Estate
Instead of sharing your own space, you can buy a dedicated investment property, either a business unit, vacation house, or apartment. The real estate investment may need to have certain amount of initial investment. The return rate is also various depends on the area.
However, the USA house market has gone up tremendous in the past 10 years. The real estate investors are not only benefit from the rents, but also the increase of house value.
Money Investment
8) Invest in Stocks with high dividend
Stock price is fluctuating, as parents, you will not have the time and energy to do plenty of research to find good stock for short term trading. The best way is to invest in stocks with significant dividend. You can also build a reliable portfolio to diversify the risk. Normally I buy one stock from the S&P 500 and hold for a longer period.
9) Investing in High-Yield Savings or Laddered CD Account
A high-yield savings account or a laddered CD is best if you want to grow your money without much thinking.
You simply put your savings in the said bank and allow it to mature over time. The best part is, you enjoy higher interest rates compared with a traditional saving account.
But, high-yield savings accounts and laddered CD accounts aren’t entirely the same.
High-yield savings accounts pay 20-25 times higher compared to the national average. You can open this kind of saving account in the usual bank you’re transacting with.
But, if you want to take advantage of the higher interest rates, open one at an online bank. Some even offer as much as 0.25% to 5.00% annual percentage yield (APY).
A certificate of deposit (CD) ladder allows you to divide your savings into equal amounts with differing maturity dates.
You can opt to open a regular CD account (1-5 years). Another option is opening a mini CD ladder with shorter maturity dates (3 mos, 6 mos, 9 mos, and 1 year).
There is no fixed minimum deposit as well since different banks have differing terms. Some may allow as little as $50 as your initial deposit.
The good news is that every quarter or year one of the CD accounts matures. You can then reinvest the payout into a new CD account with an extended maturity date.
Hence, it’s best to invest in longer-term CDs as they will have higher interest rates. Typical CD interest rates range between 2% for 1-year term CDs and 2.2% for 5-year term CDs.
Take a look at Forbes Advisor’s CD rate list for October 2022 to have a better idea.
The only catch is, you can’t withdraw the money you invested earlier than its maturity date. If you do, you’ll pay penalties.
Final Thoughts from Pragmatic Lifestyle
For a summary, these are the types of passive income you’ll start with. The most popular examples are investing in a company stock, and you receive a dividend payment. Another popular example is real estate. You buy a property, and you enjoy the rent as passive income.
Passive income is how the wealthy people maintain their wealth. When you don’t have money, you can use your time and effort to create income streams. While you are saving money, you can use it to generate more and more passive income.
Passive income always necessitates an initial investment of time or money. However, the fact that it becomes passive after you do the work is what makes it appealing. For example, if you spend six months writing a book, you can live off the royalties for the rest of your life without doing any additional work. That is not to say that doing more work will not increase your income, but there is a component that requires no additional effort to earn.
| Passive Income Source | Investment Amount | Estimated Return Rate | Risk |
| Short-term Home Rental | $0 | $900/month | Medium Risk Tenants destroy property |
| Renting Out an Unused Space at Home | $0 | $100-$400/month | Medium Risk Tenant doesn’t pay the rental fee |
| Car Rental or Sharing | $0 | $100/month | Medium Risk Car insurance not covering damages to the car as it is used for business |
| Open an online course | $0 | $0-1000/month | Low Risk the worst case is no course has been sold |
| Selling Stock Photos Online | None | $0.20-$10/picture less 50%-85% commission or processing fee | Low Risk Photos submitted get rejected |
| Vending Machines | $3,000-$10,000 | $300/monthly | Medium Risk Vending machines get damaged |
| Investment Real Estate | >$100,000 | $1,000-$10,000 monthly | Medium High Risk Low or no earnings while still need to pay the mortgage. |
| Invest in stocks with high dividend | $100-$1,000 | 2% on yearly basis | Medium High Risk the stock price can drop due to business reasons |
| High-Yield Savings account & CD Ladders | $100-$1,000 | 0.25%-5.0%/year | Low Risk Interest rates can fluctuate any time |
About Me
Hi, there. I am Lin. Together with my husband and two kids, we live in the beautiful Netherlands in Europe. I am dedicated to self-development, creating quality time for the whole family, and fully supporting kids with their potentials and possibilities with all I have learned from engineering, MBA, and 10+ years of working experience in the energy sector.
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