If you're in your late teens or early 20s and—like many young Americans—currently stressed about money, we've got some passive income ideas that might help you get by or build a more secure financial future.
In today's unpredictable economy, it's wise to have multiple sources of income—just in case you get laid off from your job or living costs go up even more. Whether it's investing in index funds and ETFS or earning through affiliate links, there are options for everyone and every budget.
Below, you'll find 16 passive income ideas for young adults. Pick one—or maybe even two or three—that you're willing to put time and effort into to make some extra cash.
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What is passive income?
Any money you earn regularly without having to actively work for it is considered passive income. Some examples include selling digital products, renting out property, and investing in dividend stocks. On the other hand, working for a client, employer, or contractor as a freelancer or part-time employee isn't passive income.
Passive income sources usually need an upfront investment of time, money, and effort. But once set up, it's mostly about maintaining what you've built. Getting into passive income as a young adult can offer several advantages, like compounding growth and building financial security.
“The power of compounding allows reinvested earnings to grow exponentially over time, leading to significant wealth accumulation,” says financial research analyst Richard Morgan, CEO and head of research at Catalyst Fund. “Multiple income streams provide a safety net and reduce reliance on a single source.”
It also encourages you to learn about money management and develop healthy finance habits, such as saving and investing. “This foundation fosters smarter financial decisions and greater independence in the long run. Starting early maximizes these advantages for substantial long-term gain,” Morgan says.
Passive income ideas for young adults
Here are 16 passive income ideas for young adults. We've gathered options that can be started with little to no money, as well as some that require a level of financial investment. Make sure to pick a venture that fits your budget and lifestyle so you don't get frustrated and lose motivation.
1. Create digital products
2. Create content
3. Work with affiliate links
4. Sell online courses
5. Sell stock photography
6. Invest in index funds and ETFs
7. Sell stock music or illustrations
8. Become a video game streamer
9. Open a dropshipping business
10. Open a print-on-demand business
11. Rent your car
12. Rent your parking space
13. Invest in real estate
14. Real estate investment trusts (REITS)
15. Peer-to-peer lending
16. Invest in a high-yield savings account
“Index funds and ETFs offer diversification and steady growth with minimal management,” Morgan says. “Creating digital content like eBooks, blogs, or YouTube channels also offers ongoing income potential once established, provided you pursue topics you're passionate about and can consistently work on.”
Let's break down each one of them.
Passive income ideas for young adults online
These passive income ideas won't require you to leave the house much. But some of them may need some financial investment. “Internet-based methods offer flexibility, potential for substantial earnings, and require relatively low maintenance once established,” Morgan says. “They are excellent options for building long-term passive income and wealth.”
1. Create digital products
Do you see yourself as a creative person? If yes, making digital products is a fantastic way to earn passive income. Digital products can include:
- eBooks
- Budget spreadsheets
- Resume templates
- Cover letter templates
- Apps
Creating digital products takes a lot of time upfront. But once they're done, your main task is to keep them available on a platform of your choice—usually for a fee—and update them occasionally. Platforms like Etsy and Gumroad are great for finding inspiration.
2. Create content
If you can establish an audience, you can earn a decent monthly amount creating content online. No wonder that's one of the most recommended passive income ideas for students and young adults.
“Creating content for blogs, TikTok, or YouTube can generate significant income through ads, sponsorships, and affiliate marketing when focused on a passionate niche,” Morgan says—and that's not exclusive to makeup, fashion, pop culture, skin care, lifestyle, games, sports, and other popular interests.
Lately, watching others deep clean their homes or cars has become a booming niche, especially on TikTok. Check out #cleantok and see for yourself. So, yeah, there are people making money from videos of themselves doing chores. You can think outside the box and succeed. Plus, all you need to start is your cell phone camera and a cheap ring light.
3. Work with affiliate links
Speaking of creating content, this side hustle can also open doors to another source of passive income: affiliate marketing. Here's how it works—you promote products to your audience and share links from partnered stores. Whenever someone buys through your links, you earn a commission.
You don't need to be a big influencer to get into affiliate marketing. Quality content and an engaged audience are often enough to attract some brands, since it's a low risk investment for everyone involved.
4. Sell online courses
If you have a skill or knowledge you're comfortable teaching, you can earn passive income by selling online courses. Platforms like Udemy, Skillshare, and Teachable host all types of courses from Excel basics to painting.
Like other digital products, creating an online course requires upfront work to plan and record classes. Depending on your topic, a good camera may be needed. Plus, these platforms typically charge an annual fee or transaction fee, taking a percentage of your profit. So, it's wise to research the market and plan carefully before jumping in.
“It can be lucrative but requires immense upfront effort and effective marketing in a saturated market to generate consistent sales,” Morgan says. “Without a strong niche or audience, the resources invested might not be justified.”
5. Sell stock photography
Do you enjoy photography? If so, consider selling stock photos. It's a low to medium effort way to earn money, although you'll need to go out to take some photos. You can start with your cell phone camera—as long as it takes good quality pictures—and later upgrade to a professional camera.
Be sure to use reputable stock photo websites like Shutterstock, iStock, and Unsplash to avoid scams or delayed payments. Also, take time to carefully read the platform's criterias and information about fees and payments to ensure it's worth your time and effort.
Passive income ideas for young adults from home
Do you prefer staying at home but are not too keen on starting an online business? These might be the best passive income ideas for you.
6. Invest in index funds and ETFs
Saving and investing money in your 20s may be a smart move to earn passive income and potentially secure a stable financial future. If you're looking to dip your toes into the stock market, index funds and ETFs can be great starting points.
Index funds are designed to follow a benchmark index, giving you a diversified portfolio in a simple and cost-effective way. ETFs, short for Exchange-Traded Funds, are a mix of assets that are traded like stocks. They're known for their diversification and lower fees.
If you're new to investing, consider consulting a financial advisor or checking out online resources such as investment apps with robo-advisors.
7. Sell stock music or illustrations
If you can play an instrument—and have one at home—or have graphic design skills, think about selling stock music or illustrations. It's like stock photography: you upload your creations to a stock website and earn a cut from each licensed download. The commission rates vary between platforms, so dig deep into individual websites to grasp how pricing and commissions work.
8. Become a video game streamer
Homebodies who love gaming can become streamers on platforms like Twitch and YouTube. It's estimated that small Twitch streamers with around 100 average views earn up to $1,500 monthly. Earnings can grow exponentially if you grow a large audience, coming close to six figures.
However, like content creation, streaming generates income passively only in the long run. At first, you'll have to put in a lot of effort and time to stream at least weekly for little gain, until you get some traction in your channel. You might also have to invest in a good set of headphones with an attached microphone.
Passive income ideas with little money
If you're cool with staying in or going out as long as you don't have to spend money, these passive income business ideas are for you.
9. Open a dropshipping business
You can set up an online store without spending much by using dropshipping. It's a retail method where you don't keep products in stock. Instead, you forward orders to a supplier who handles packing and shipping. Your main cost would be maintaining your online store.
10. Open a print-on-demand business
Like dropshipping, print on demand (POD) lets you design personalized products, set up an online store and send orders to a POD partner who handles printing, packing, and shipping for a fee. Popular POD products include t-shirts, socks, tote bags, and mugs.
11. Rent your car
If you don't use your car on weekends, you can rent it out for others to use. Start by researching reputable rental companies and follow their guidelines to enlist your vehicle. Usually your insurance coverage must be suitable for rentals and meet the platform's standards. Getaround, a well-known company in the market, has criteria for car model year, mileage, and condition, to name a few.
12. Rent your parking space
You can also rent out a parking spot you don't use to commuters or neighbors. To save a couple bucks, advertise on social media profiles or dedicated groups. There are also platforms like Spot Hero and Spacer where you can list your parking for a fee or a percentage of your profit.
Bonus passive income ideas for young adults
The passive income ideas below might not be doable for most young adults because they need a big financial investment or come with a risk of losing money—something people starting their careers usually can't afford. But if you're financially equipped, these options may pique your interest.
13. Invest in real estate
Flipping or buying property to rent out is a classic way to make passive income. While it can generate steady income for a long period of time, you'll need a considerable amount of money to get started.
14. Real Estate Investment Trusts (REITs)
Investing in real estate isn't just about owning property; you can also trade in REITs on the stock market. The caveat: REITs dividends are taxed as regular income, have modest growth potential, and come with management and transaction fees.
15. Peer-to-peer lending (P2P)
This involves lending money to individuals or businesses through online platforms that match lenders and borrowers. According to Morgan, while P2P lending has the potential to offer high returns, it lacks reliability due to the risk of borrower defaults.
16. Invest in a high-yield savings account
High-yield accounts are popular for having higher interest rates than traditional savings accounts. However, they might not be the best passive income option for those aiming to build wealth. “Their low returns barely outpace inflation, making them less effective for substantial wealth building,” Morgan says.