Understanding And Creating Residual Income

By | January 17, 2014

You need to make money to be able to live, it is fact of life. Money buys you food, clothing and shelter and this is true in all parts of the world. But there are different ways that you can earn money. You don’t have to be rich to become a rich business person; it just takes a lot of hard work, this is where residual income can help.

Residual Income

There are two different means of earning money and this is important that you learn to work out ways in which you can increase the money that you have coming in. The first option is where you work for a set amount of hours and you receive a set amount of money for your time. The second option, called passive income, will allow you to do less for the money that you earn in the long term.

Active income

This is the income that you earn when you work, whether self-employed or employed and you are being paid for the hours that you are working. Each hour that you log for your employer they are paying you for your time. This type of income can make you comfortably well off but you should be able to make more money with by creating a passive income.

Residual (passive) income

The idea here is that you have a product that you are able to sell time and time again with minimal input. Some of the classic ideas in this section are:

  • Renting out properties
  • Selling books and e-books
  • Having a product that is constantly required or renewed

There is a misconception with residual incomes; many people think that the money will continue to fall into your lap without much, or, any input. This is not the case you still need to make adjustments to this income by making sure that it has the ability to continue to bring in that revenue.

To show this with examples:

If you consider a wealthy business person; they don’t stop working completely because they need to make sure that the revenue will continue over longer periods of time.

If you have a rented property you can guarantee that as long as you keep the upkeep of the home working then the property will continue being available for rent, this means that you have the potential to have money coming in. If you let the property become uncared for and not looked after then you would not be generating any money because people would not rent the property.

Another example is in business if you are a dog walker there is only x amount of hours in the day. But if you have others that are there to help you, another dog walker, you will have more hours available to hire your time out, and this means that you might not need to work as many hours because you have found another way to do the work.

There are many different ideas regarding how to make money in a passive way, but be warned they are all going to involve some form of work.

If you are looking to turn your life into one that you are able to make more by having a passive income then you are going to need to find time. You need to be able to set the passive income going before it will draw in the revenue and before a reduction in the active hours that you work.

Words of warning

This is not going to be an instant change there is going to be a period of transition, it might feel that you are actually working longer than before, technically you will be.

There are many different options that you can use to create a passive income, but be warned there are many jobs that claim that you can make millions of dollars by doing little to nothing, these are mostly going to be scams. You must do your homework on any idea that you have decided upon. Make sure that the idea is legitimate and is going to work.

There is no point thinking that you are going to make millions writing a book if you have never put pen to paper before. It is going to hard work and there are no guarantees that your idea is going to work. This is why it is important that you are fully aware of the time that you will need to dedicate to the business idea and fully form a plan of action. You need to have all the information to hand, back up any figures with relevant information so that you are not going to be putting money or time into something that isn’t going to work.

Idea for generating a passive income

  • Writing an E-book is going to be a way that could draw in some money but you will need to market the book and you will need to continue writing more books so you are able to continue the revenue coming in.
  • There are many people that have created affiliate websites, they promote products and make a percentage amount of money if you are able to send customers to the affiliate site and they purchase the item.
  • Make YouTube videos; there are many different categories that can be used. You will only be limited by your imagination.


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