Side Hustle vs. Passive Income: Which Is Better?

When it comes to making money, there are countless strategies and opportunities available. Two popular methods you may want to compare include a side hustle vs. passive income.

Both offer the potential for additional income, but they differ in terms of time commitment and effort required. In this article, I will explain what side hustles and passive income are, discuss their pros and cons, provide examples of each, and offer tips on how to get started.

But first, this post contains affiliate links. Read my full disclosure policy to learn more.

Side Hustles: Definition and Examples

A side hustle is a job or business that you pursue in addition to your primary source of income. It is typically something you do outside of regular working hours, such as evenings or weekends.

Side hustles can take on many forms and can range from freelance work to selling products online. The key characteristic of a side hustle is that it requires active participation and effort on your part.

There are numerous examples of side hustles that people engage in to earn extra income. One popular option is driving for a ride-sharing service like Uber or Lyft. This allows individuals to use their own vehicle to transport passengers and earn money on their own schedule.

Another example is freelance writing or graphic design. Many people have skills in these areas and can offer their services on a freelance basis to clients.

Additionally, some individuals choose to start their own online businesses, selling products or services through platforms like Etsy or Shopify.

Pros and Cons of Side Hustles

Side hustles offer several advantages, including:

  • An opportunity to earn extra income. Who doesn’t want to increase their earning potential to help reach their financial goals?
  • Flexible scheduling. You can build your side hustle alongside your regular day job, and you can work when you have the time.
  • Variety of opportunities. Whether you want to work in person or remotely, do something creative or more straightforward, you can find a side hustle that works for you.
  • Quick payouts. Depending on the side hustle you pursue, you may be able to get paid weekly or even daily in some cases.

However, side hustles also have their drawbacks, such as:

  • Can lead to burnout. You have to work on your side hustle outside of the 40 hours you spend at your day job, which can be overwhelming.
  • Required ongoing involvement. To keep earning money from a standard side hustle, you have to keep working as most don’t allow for passive income.
  • Income ceiling. You’ll eventually hit the maximum amount you can earn from your side hustle, either due to scheduling or to raising your rates.
  • Some have significant expenses. If you choose a side hustle like ride sharing or delivery driving, you can incur a lot of costs related to car maintenance.

Tips for Starting a Successful Side Hustle

If you are considering starting a side hustle, there are a few key tips to keep in mind.

Understand Your Skills and Interests

Firstly, choose a side hustle that aligns with your skills and interests. This will make it more enjoyable and increase your chances of success.

If you don’t like driving, you’ll probably hate doing so for Uber, Lyft, or DoorDash. But if you like exploring your town, you may love that type of side hustle.

Similarly, maybe you don’t have any design experience. You could be a designer, but you’ll struggle to get clients if you can’t prove your skills.

Do Market Research

Additionally, consider the market demand for your chosen side hustle. Research competitors and determine if there is a viable customer base for your product or service.

Having some competition is a good thing. It proves that there’s a need out there for your chosen side hustle, so you may have an easier time getting started.

If there’s no one doing your chosen side hustle, you’ll have to work a little harder to prove to customers they need your service.

Set Reasonable Expectations

It is also important to set realistic goals and expectations for your side hustle. Understand that it may take time to build a steady income and be prepared to invest time and effort into growing your business.

You can’t spend an hour here and there and expect your side hustle will grow. Instead, find a schedule that you can stick to long-term.

Follow that schedule as closely as possible so that you can reach your goals. But don’t be afraid to adjust your schedule as your needs and obligations change.

Manage Your Time

Finally, make sure to manage your time effectively. Set aside dedicated hours for your side hustle and create a schedule that allows for work-life balance.

I like to give myself at least one day off each week. That gives me time to relax and decompress from my regular day job as well as from any side hustle projects I’m working on.

But maybe you can only give yourself a half day off. Figure out what works for you, and use that down time to recharge for the next week.

Passive Income: Definition and Examples

Passive income, on the other hand, is income that is earned with little to no effort or ongoing active participation. It is often referred to as “making money while you sleep” because the income is generated without direct involvement.

Passive income can come from various sources, such investments or royalties from creative works.

One example is dividend income from investments. When you invest in stocks or mutual funds, you can earn dividends, which are a share of the company’s profits distributed to shareholders.

A newer example of passive income is that of content creation. It involves a lot of active work upfront, but you can continue to earn money from your earlier efforts.

Pros and Cons of Passive Income

Passive income offers several advantages, like:

  • Financial security and stability. You can continue to earn passive income when you’re not working actively, which is great for during vacations or when you get sick.
  • More freedom and flexibility. You’ll have more control over how you spend your time outside of your day job without sacrificing extra income.
  • Ability to scale. Once you establish one passive income stream, you can move on to the next one, which can help you earn even more money over time.
  • Various options. Like side hustles, passive income opportunities abound, so there’s something for everyone.

However, passive income also has its downsides, including:

  • The initial investment required. Passive income streams may require a significant amount of cash upfront, particularly many investments.
  • Needs specialized knowledge. You may also need knowledge of investing or other financial skills to be successful at generating a passive income.
  • Upfront effort necessary. If you find a passive income that doesn’t require much money, it will most likely require a lot of time and effort before you can expect to see a return.
  • No guarantee of earnings. Because of the nature of passive income, you can’t predict for certain whether you’ll earn money from it.

Different Passive Income Streams to Consider

There are numerous passive income streams to consider, depending on your interests and financial goals.


Investing in stocks, bonds, or mutual funds is one possibility, as these investments can generate regular dividends or interest payments. But you may need to put in a lot of money to see a lot of that back.

That can make this passive income stream unachievable for most people.

And while some consider real estate a passive income stream, it’s far from it. You need to maintain your properties or hire someone to do it, which affects your bottom line.

Digital Products

Creating and selling digital products, such as e-books or online courses, is also a viable passive income stream. Once the initial work is done, these products can be sold repeatedly without further effort on your part.

You’ll need to spend time creating content to promote your products. An audience is also required, especially if you want to make a significant profit.

You can build your audience along with your product. But it helps to have some followers before you launch a product to increase the chances of getting a sale.

Affiliate Marketing

One of my favorite passive income streams include affiliate marketing, where you earn a commission for promoting and selling other people’s products.

You can find products you love, and you can see if there’s an affiliate program. If so, you’ll get a unique trackable link to share on your website and social media.

Whenever someone makes a purchase through your link, you’ll get a kickback. What’s more, some affiliate programs offer recurring commissions, so you can earn more over time.

Tips for Generating Passive Income

If you are interested in generating passive income, there are a few key tips to consider.

Choose Carefully

Firstly, educate yourself on the different passive income streams available and choose the one that best suits your interests and financial goals.

If you don’t have a lot of money in the bank, digital products and affiliate marketing are great options. You can focus on creating content using devices you already have.

Or maybe you have access to significant funds, so you decide to invest in some stocks to earn passive income.

Do Some Research

Conduct thorough research and seek advice from experts if needed. This is particularly important if you want to invest in stocks or mutual funds.

It can help to hire a financial advisor to help choose your investments. They’ll take a cut of your earnings, but it can be well worth it.

Meanwhile, if you want to create content, you’ll want to research how to do that well. Consider taking a course or two to increase your skills.

Be Consistent and Persistent

Additionally, be prepared to invest time and effort upfront to set up the passive income stream. While the income may become passive once established, there is often work required in the initial stages.

With both digital products and affiliate marketing, you’ll need to create a lot of content. Post it to the right platforms where it can reach a lot of people.

Use your content to drive people back to your website where you sell your products. Or send people to a page with all of your top affiliate links.

Eventually, your work will start to pay off (literally).

Diversify Your Income

It is also important to diversify your passive income sources. Relying on a single income stream can be risky, as market conditions can change or investment returns may fluctuate.

Consider creating a few different digital products or investing in multiple stocks. If you want to go with affiliate marketing, join multiple programs to promote various products.

By diversifying, you can spread out the potential risks and increase your chances of generating a stable and reliable passive income.

Comparing a Side Hustle vs. Passive Income: Which Is Better for You?

Now that we have explored side hustles and passive income in detail, it’s time to compare the two and determine which one is better for you. The answer depends on your individual circumstances, goals, and preferences.

If you have limited time and are looking for a flexible way to earn extra income, a side hustle may be the better option. Side hustles allow for active participation and can be started with minimal upfront investment. They offer immediate income and the ability to adjust your schedule based on your needs. However, it is important to consider the potential for burnout and the need for ongoing involvement.

On the other hand, if you have the financial resources and are willing to invest upfront, passive income streams can provide long-term financial stability and freedom. Passive income offers the potential for income generation without active participation, allowing you to focus on other aspects of your life. However, it requires careful research and understanding to choose the right passive income stream and manage the associated risks.

Final Thoughts

In conclusion, both side hustles and passive income offer viable ways to supplement your income and achieve financial goals. The key is to determine which strategy aligns with your skills, resources, and preferences.

Consider your time availability, financial situation, and long-term goals before making a decision. Remember, there is no one-size-fits-all answer. What works for one person may not work for another.

Take the time to assess your options, explore different avenues, and choose the money-making strategy that best suits your needs.

Enroll in Affiliate Marketing Superstars if you want to start earning passive income from your content!

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