What the heck is a passive income stream and how do I sign up?

IMAGE VIA @coach/instagram


Making money work for you.

I’ve never been particularly savvy with budgeting. I’m currently blaming my spontaneous lockdown retail therapy and a concerning amount of weekly over-priced coffees, but I’m just generally not too keen on crunching numbers. 

I’m a perpetual job juggler, who, figuratively speaking, is a little exhausted from balancing the ridiculous amounts of hats I wear in a week. Rotating through an endless cycle of changing nappies, teaching various forms of the pas de bourrée, running events for my student union and shaking cocktails on repeat is getting kinda draining – no shade to any of my employers.

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Naturally, when I heard about a concept that supposedly gets money working for me via a so-called passive income stream, to say I was intrigued is a complete understatement. Any opportunity to bulk up my income at the expense of minimal effort has my name written all over it.

To help me navigate the pros and cons (spoiler alert, there aren’t that many) of this alternative means of getting that coin, I turned to award-winning financial advisor and queen of all things moolah, Victoria DevineRead on to get the She’s on the Money podcast host’s rundown on passive income streams. 

What is a passive income stream?

Victoria lays it down for us very simply. “A passive income is a stream of income you make by doing very little,” she explains. Sounds like a bit of a cheat code, right? It’s basically a way of setting some foundations in place to ensure you’re getting money flowing into your bank account in regular intervals without breaking a sweat. Ka-ching. 

There are tonnes of creative ways you can curate a passive income stream and make sure some pretty consistent coin is coming in by leaning into your strengths and potentially supporting your main hustle. “Having a property with tenants who pay you rent and having other investments like shares are the most common ways of setting up passive income streams, however, there are other creative ways to do it too,” Victoria says.

“For example, content creators who have a big following might create an online course of some kind that requires a fee to set up, but then it pays for itself as the product is on the market and all you need to do are a few marketing pushes here and there to boost sales.”

The whole idea of a passive income goes against the grain of what we’re taught about making money, so for the plant enthusiasts reading this (I see you) allow me to put it into perspective with a little horticultural analogy.

A passive income is like a succulent. The potting process is important and crucial for sustained growth, but it doesn’t require an exhausting amount of stressful maintenance in order to keep the plant alive, allowing you to admire its juicy green leaves basking in the morning light while you sip a cuppa. Got it? Let’s move on.

What are the goals of a passive income stream?

Let me emphasise that the key to a passive income is, well, passivity. Do not fret! This isn’t your run-of-the-mill, rise-and-grind girl boss approach to money-making. The goal of a passive income stream is thankfully, quite the opposite. 

“The main goal of a passive income stream is to propel your journey to financial freedom by generating extra cash flow and supplementing your regular income in a way that doesn’t require huge amounts of effort from you,” Victoria shares. “We want it to be relatively easy and stress-free!”

To make sure a passive income isn’t just another one-way ticket to productivity guilt and burnout, Victoria says the key is ensuring you aren’t breaking your back (or your bank) in generating your passive income.

“There shouldn’t be too much work involved when it comes to a passive income stream, otherwise it’s not really passive at all.” In setting up your passive income stream, a little bit of elbow grease may be required in laying down the foundations. But after these initial stages, you should be able to kick your feet up and watch the dollars roll in, stress-free. 

“Passive income is definitely easy money (that’s the point of it after all!), but the work comes in setting ourselves up to be in a position where we do earn a passive income,” Victoria says.

“[Passive income streams like] workshops, eBooks or even YouTube videos [require] time, effort and money invested at the beginning of the project, but then once it’s complete you’re in a position where you’re making money without having to do much at all.”

How do I know if I should invest in a passive income stream?

Victoria suggests starting off by weighing up the amount of effort it’ll take you to set up your chosen passive income stream against the expected amount of potential income you’ll receive from it. “If it’s within reach and will have an impact on your finances for the better, then go for it,” she tells me.

Another important factor worth considering is any compulsory maintenance required for your passive income. For example, staying on top of what you’re making from your passive income is a must for when the tax-man comes a-knocking.

Now, before you toss aside your regular nine to five in lieu of the high-life supported solely by a passive income stream (trust me, I was tempted too), mull over whether dedicating your entire mode of income to money that’s earnt in your sleep will impact your motivation.

“We can’t diminish the importance of having a purpose and of having somewhere to go (or log on to) each day, so I would caution against giving up your career for a life of passive income and pina coladas,” Victoria warns.

Rather, think of kicking off a passive income stream as a way of, as Victoria puts it, “boosting your cash flow” and setting yourself up for “a less financially stressful life”.  

For more information on passive income streams, check this out.

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