A few weeks ago I published a detailed step-by-step guide on Medium about how I generate $1,500 of passive income every month. At age 29 I refuse to trade time for money and explained how others can get here too.

So far, 100,000 people read it and I received tons of questions, comments, and emails about it. Side note, I also made a whopping $5,000 with it through the Medium partner program but that's the story of another article.

Anyway, since it seems to strike a chord I wanted to share its essence here too.

A few words about my backstory:

At 25, I had an epiphany. I hated to sacrifice half of my waking hours to work for someone else. Even though my job at a multinational company was okay, a feeling of suffocation crept over me with every day I turned on my computer.

My mom passed away from breast cancer at age 48. This defining experience taught me you can’t assume you have a whole lifetime in front of you to do all the things you want to do.

This realization constantly fuels my perseverance and kept me from giving up when my business went down the drain and my savings neared the end.

Note $1,500 isn’t massive wealth I accumulate every month. However, it’s enough to cover all my costs of living and even put a little aside. I don’t have to worry about making ends meet.

I work 10–15 hours a week to generate additional, regular income, and I have more than enough to live, save up, enjoy life, and tinker with passion projects that’ll hopefully generate more passive income later.

How to Make Passive Income Selling a Digital Product

There are many ways to make passive money online (affiliate marketing, dropshipping, investing, etc.). Nevertheless, I’ll focus solely on selling digital products.

Why?

Because that’s how I make my money and, therefore, have expertise in.

Step 1: Decide about the framework.

I quit my job to do this. Can you quit yours too? It largely depends on your savings, expenses, and willingness to take risks. Overall, it feels good to have enough money to live off from a year and have a buffer on top of that.

While I started like that I can attest to significantly higher stress levels once I got below this threshold and, therefore, don’t recommend it.

Whatever you decide, don’t assume you can generate income within a few months. It took me over a year of hard work and zero cash flow to figure it all out.

If you decide you can’t quit your job that’s okay. I know several people who built successful online businesses while employed.

Step 2: Decide on your niche and a product you want to sell.

I sell Hungarian language courses. Hungarian is considered to be one of the most difficult languages in the world (along with Mandarin Chinese and Arabic). It’s also my mother tongue.

When you look for your niche, here’s what you should ask yourself:

What is it you know only a few others know, but many want to learn?

While 10 Mio people speak Hungarian, only a few of those speak English at my level, and even less want to teach it.

When I started out, there was one proper autodidactic online course and a few apps floating out there. At the same time, language forums, related Facebook groups, and the Hungarian-learning subreddits had thousands of members.

This way I was confident I had a business.

Note this is a simplified depiction of how I found my niche - in the end, it took me weeks. I list some tremendously helpful resources and steps about how you can find yours too in the article.

Step 3: Start an email list.

I cannot emphasize this enough. Most people skip this step and later wonder why their social media audience doesn’t convert.

My business runs almost entirely without social media.

I explain why your email list will be your superpower, lovechild, and most valuable asset you ever build and the resources to start one in the article.

Step 4: Grow your email list to 500.

You’d think 500 people are too few to make real money. You’re wrong. I had 500 people on my email list when I pre-sold my first course and it was a massive personal success (more on this later).

I’m not gonna lie, however— it isn’t easy to get to the first 500 people on your list.

I list the exact steps I followed to gain my first 500 subscribers in the article.

Step 5: Pre-sell your product idea.

You don’t have to build an entire product before you make money. You can generate income with a product that exists only in your head.

In fact, this is what you should do, as it gives you direct feedback about whether your idea is viable or a waste of time.

How to do this and see great results, however, goes beyond the scope of this tutorial. That’s why I wrote another in-depth tutorial with every step of how you can pre-sell your product idea to your audience.

Bottom line: I made almost $3,000 before I launched my first digital course. That’s $3,000 for a product that didn’t exist yet (see article for screenshots with proof).

This helped me drive home I don’t need fancy social media accounts and hundreds of thousand people I reach to achieve it. All I need is a dedicated audience I was now determined to grow.

Step 6: Build & launch your product.

This goes parallel with the previous step. After the initial pre-sale, it was clear the product idea is viable (ie. people were ready to spend money on it), so we proceeded to create the product.

At the same time, we left pre-orders open until launch and grew our email list.

Step 7: Build a sales funnel.

Once you launched your first product, it’s time to automate the process and make the leap towards passive income.

It’s time to build a proper sales funnel.

People find a freebie you give away (e.g. through Facebook ads) and subscribe to your email list;
They receive several emails with free nuggets of information, each of which helps them to solve their most pressing problem regarding your topic;
You introduce your product and ask them to buy it for a discount with a deadline attached.

In the end, all passive income that comes from digital products boils down to these 3 crucial steps.

People wrote entire books about email funnels. In the end, though, all you have to do is be helpful and offer a lot of value for free in your emails before you pitch and ask for money.

My longest funnels are 10+ emails long and span over 2 weeks. These are also the most successful ones.

Step 8: Do flash sales.

Every few months, it’s time to remind your email list of your product(s). You think it’s pushy and if people decided once your product isn’t for them you should respect their decision.

In fact, the opposite is true. I sell a lot more products per subscriber with flash sales than through my sales funnel.

I added screenshots of my flash sales to the article for proof - I made almost $5,000 within a week. All I did was send a few emails.

Final Thoughts & Takeaways

Voilá — after you completed these steps you likely built at least some passive income.

Like me, you might not make enough yet to ditch all work. Nevertheless, you’ll be on track.

Once you built one product, you can expand further, focus on growing your list, create a new product, or think of other passive income streams.

My current monthly $1,500 consists of two digital products as described above which I sell through an email list that meanwhile grew to 4,000+. I do 2–3 yearly flash sales. I also started a Steady account (the German equivalent of Patreon).

I promise all of these got easier after I built and sold my first product.

These are the main takeaways:

You don’t need a bunch of starting capital.
You don’t need a large social media following.
Essentially, you only need 3 things to run this; a product, an email list, and a sales funnel with a freebie as a lead magnet.
Have patience and accept this won’t happen overnight.

In the end, self-employment fulfills me with meaning**.** I don’t feel like I live half of my life working on someone else’s dream.

Overall, I have a strong sense I don’t waste a minute of my life. I no longer have a long bucket list of things I want to do when I have more money, more stability, or more security at some point in the distant future. I just do them. Life is too short for that sh*t.

As I said, I’m average, had zero starting capital, and took on zero debt. All I had was a thirst for life that never ceased.

If I can do it, you can do it too.

For more detailed insights and descriptions of each step read the whole article. These are beyond the scope of a Reddit post.

If you have questions, bring them on!

I wish you a successful journey.