Key takeaways

  • Passive income requires little to no daily effort to maintain and can serve as a financial cushion for recent graduates.
  • Some passive income strategies include participating in affiliate marketing and creating an online course.
  • Building a passive income stream takes time and dedication, but can provide a valuable source of income.

Transitioning from college to the workforce is a significant milestone that presents new opportunities and challenges. You might be focused on your new job and adjusting to the professional world, but you can also use this time to explore passive income strategies.

After graduating from the University of North Texas with a bachelor’s degree in psychology, Angelina Licari had difficulty finding a full-time job. She decided to sell items on Poshmark so she could make ends meet while continuing her job hunt.

“I thought it could be a fun way to make money by selling clothing I didn’t wear anymore,” says Licari, owner of Poshmark closet @shoplinabtq. “If you were to tell me five years ago that I would be in a position where I could follow my creative ideas and build my own business, I wouldn’t believe you,” she adds.

Licari has been so successful that she’s thinking about reselling clothes on Poshmark full-time. She says during her first year in business she earned more than some of the entry-level job offers she eventually received.

“In 2024, I’m projected to double my earnings from 2023 with high hopes of hitting the six-figure mark,” Licari tells Bankrate.

Passive income is a practical way to supplement your income and boost your financial health, even if you’re just starting your career. Read on to learn what passive income is, why it’s beneficial, and six passive income ideas you can implement as a new college graduate.

What is passive income?

Passive income requires little effort to maintain. It’s like setting a financial strategy on autopilot. Although this might involve some work upfront, it has the potential to help you earn money while you sleep.

“The ability to earn passive income isn’t tied to your age or place in life,” says certified financial planner Lawrence Sprung, author of Financial Planning Made Personal and founder of Mitlin Financial.

“Passive income can be earned in many ways and the only limiting factor a recent college grad may face is their ability to make a capital investment if that’s needed,” adds Sprung. “For example, stocks and bonds can create a passive income stream, but this would require an investment by the recent grad that would then produce that income.”

Benefits of passive income

Passive income can serve as a financial cushion, providing an additional stream of income apart from your salary. It can help you pay off debt faster, save for future goals and make purchases without stretching your budget.

Diversifying your income sources makes you less reliant on your primary job. This is especially valuable during uncertain economic times. It also allows you to earn money outside your regular work hours, helping to boost your overall income without demanding a significant time investment.

Michael Hills, a certified funds specialist and certified income specialist with Apex Wealth, emphasizes that passive income requires some work. Earning money passively doesn’t mean you don’t have to roll up your sleeves.

“Keep in mind that passive income doesn’t mean no work is required at all. Often, significant work is required on the front end before you see any cash flow,” says Hills. “Also, understand that each investment to generate passive income carries a degree of risk, tax treatment and time commitment.”

6 passive income strategies for new college grads

Here are six strategies new college grads can use to generate passive income.

1. Open a high yield savings account

A high-yield savings account is a simple, low-risk way to earn passive income. Unlike regular savings accounts, these accounts offer significantly higher interest rates, allowing your money to grow faster over time. Furthermore, your money stays liquid, meaning you can access it whenever you need it.

The top money market accounts offer more than 5 percent APY. This is much higher than the national average, which is 0.46 percent APY as of this writing.

2. Participate in affiliate marketing

If you have a blog, YouTube channel, or a strong social media presence, affiliate marketing can be a lucrative passive income source. You can promote related products or services and earn a commission on sales made through your referral links. The key to success is to promote products you genuinely like and that your audience will find valuable.

3. Create an online course

Using your knowledge to create an online course can be a great way to generate passive income. Whether you’re proficient in a specific academic subject, a foreign language, computer programming or any other skill, you can package your knowledge into an online course and sell it on platforms such as Udemy or Skillshare. While it requires initial effort to create and market the course, once it’s live, it can generate income with minimal upkeep.

4. Use your car to advertise

If you own a car, you could earn passive income by turning it into a mobile advertisement. Companies such as Wrapify will pay you to have your car wrapped in advertisements. You can earn up to $450 per month depending on how much of your car is wrapped and how much you drive. This can be a convenient way to earn money, especially if you commute regularly.

5. Sell or rent your textbooks

Don’t let your old textbooks gather dust on your shelf. You can sell or rent them out to earn passive income. Websites such as Amazon, AbeBooks and BookScouter make it easy to list and sell your textbooks. Keep your books in good condition to get the best prices.

6. Become a house sitter

House sitting is another way to earn passive income. Many homeowners are willing to pay someone to stay in their home while they’re away to ensure it remains safe and well maintained. You can find house sitting opportunities on platforms like TrustedHousesitters and Rover.

In addition to earning money, house sitting can also provide a quiet place to focus on other income-generating activities, such as creating an online course or writing a blog.

How to get started with creating passive income

Before looking for ways to build passive income, identify which strategies align with your skills, interests and resources. Make sure the income idea you choose is one you can see yourself sticking with.

“It’s important to use your time wisely to research and ensure this venture is reliable and sustainable” says Hills. “Fees and maintenance are key factors to consider when earning passive income.”

Bottom Line

Whether it’s opening a high yield savings account, participating in affiliate marketing, or creating an online course, there are many ways for recent grads to generate passive income. The key is to identify which strategies align with your skills and resources. With focus and dedication, you can build a successful passive income stream and save money for the future.