College is the perfect time to establish passive income. Creating a small, simple source of automatic income can provide the beer money necessary to enjoy the semester. And, it can pay huge dividends down the road.

Passive income is money that you earn on a regular basis without doing that much work (ideally, it’s one large investment of time that requires only a little maintenance afterward). Passive income used to mean a huge investment of both time and money, one of which, college students don’t have. But it doesn’t take renting property or earning music royalties to make passive income anymore. All it takes is a very simple business idea that “runs itself” (most likely, actually, it’ll be run by computers). I have two sources. It took a weekend.

It’s great to start some passive income in college because it’s a time in your life where you’ve got “time off.” It’s harder to do this kind of thing when you have a regular 9-5 because it requires a big initial investment of time, especially if you want to make something really bulletproof. In fact, turn it into an independent study and get some class credit for your creation.

It’s also a great project in college because once you set this thing up, it can presumably run for the rest of your life – 80 years of earning a dollar per day makes almost $30,000. Throw that into an account earning 5% at the end of each month and you’ll have almost $400,000 after 80 years.

The most important part is your actual idea. It needs to incorporate automatic marketing, an automatic way of delivering a product and a way to make money on it. The simplest one to wrap your head around is a website. People find the content online somewhere, visit the site, and click an ad. But the more effective you can be about getting someone to click that ad is the real trick. And if your site is dependent on your maintaining it regularly (a blog), then you’re still working for money. The goal is to do no work – let the site run itself. Looking at some examples will help.


I’ve put together two single-serving sites that simply answer relatively frequently-searched queries: the price of a stamp and the cost of tuition at UCLA. (Look at that anchor text work its magic!) After building a little search engine clout, these sites come up in tons of long-tail searches even when they’ve been out-maneuvered by a few other articles/sites in the keywords I’m shooting for.

The price of a stamp plus a few ads. Simplicity is key. When people click through to get their answer they have two choices: hit the “back” button (not very user-friendly) or click on an ad. It’s no mistake that UCLA has the largest applicant pool of any college in the nation. And it’s no mistake that people who search for the price of a stamp online are also likely to buy some postage online. These are a few ways they garner traffic and clicks.

They’re not cash cows, but they do decently well for a small investment. Any static site about a simple subject can pay dividends.

Digital downloads

In Tim Ferriss’s book, The 4-Hour Workweek, he talks about slightly more involved forms of passive income that involve drop-shipping and customer service reps in India. Offering a digital download leans a little more in that direction. It takes more time, money and maintenance, but it could earn you a lot more money.

Pick a product you can offer – this’ll take some soul-searching. It could be an MP3 of fart sounds or a PDF about brewing booze in your dorm. It could be a how-to video about unwrapping a Starburst in your mouth. It should be just unique enough where there’s almost no competition and just popular enough to attract an audience.

Set up a basic site. I highly recommend using PayLoadz to do your distribution. They handle all the billing and downloading infrastructure and it’s free if you don’t make that many sales in a given month. If you want to go print, you might try MagCloud, which does the same thing but with actual printing presses. Pick a marketing option that runs itself after some testing (probably AdWords). These are just a few of the many automated tools that remove humans from the process.

A buddy of mine who’s gone the download direction is Walt Ribiero with ForOrchestra. He composes popular songs for orchestras, puts a video of it on YouTube and the MP3 on iTunes. He updates it regularly, but if he felt so inclined, he could leave it as-is. The catalogue of music will keep generating income as long as people are searching for it. Listening to “Poker Face” 10 years from now may be considered high crime, but Walt will still be making a few bucks off of his orchestral cover.

Got the picture? All it takes is a great idea and some clever automation – put as much time in as you can sacrifice. Here are the three elements to keep in mind:

  • automatic marketing
  • automatic delivery
  • monetization

And if not, you can still make money without doing any work by signing up for work-study.

[lead image via Misterteacher]