Residual income is the key to financial independence. That might be a bold statement but I can back up this claim. First of all, just so we’re on the same page, this type of income is one where you get paid over and over from work that you did once. Just knowing this alone should help you realize just how powerful this type of income truly is. Think about it for a second. What do most people spend their adult life doing for 40 hours a week? That’s right, they work. The only reason most of us work is to make money in order to have the lifestyle that we desire. What if you were able to have income coming into your bank account without working? Sound impossible? If it does sound far fetched to you then you’re not alone.

Most of us were brought up with the mentality of going to school, getting a job, and working until you retire. Although this is a plan, it’s a bad plan in my honest opinion. Life is short and it doesn’t make any sense to be spending most of our adult life working for that paycheck. What most people have following this plan is linear income. Let’s take a look at the difference.

Linear Income

This is where you trade your time for money. You go to work for 40 hours, you get paid for 40 hours. It doesn’t matter how much you make per hour, if you ever stop working, your income will also stop. In order to have financial independence with this type of income, you will need to increase the amount you make per hour to the point where you are making enough to save up enough to retire at a reasonable age. If you get this type of income, then you’ll have to make quite a lot of money per hour if you ever hope to retire before the age of 60.

Residual Income

With this type of income, even after you stop putting in time and work, money still goes into your bank account. You might actually already be making some residual income. If you have a savings account, then you are making money each month from the interest that the bank pays you. Of course, unless if you have hundreds of thousands of dollars in your savings account, you’re not earning much income, definitely not enough to retire on.

What if you are able to have enough residual income to cover all of your monthly expenses, how would your life be like? Think about it. Let’s say you need $10,000/month to have the lifestyle that you want. With linear income, you’ll have to put in the time in order to make the money to have that lifestyle. This will go on unless you save up enough to live the rest of your life without having to work. With this path, it will take a while. Just 10 years of retirement will cost you over $1 million.  But what if you are able to make residual income, enough to cover that monthly expense? Well, it would mean that you will be able to retire much sooner. This is the power of residual income.

Disadvantages

The advantages of earning residual income is obvious, it gives you the ability to become financially independent. However, there are a couple of disadvantages as well.

1. Slow results

Unlike linear income where you get paid for ever hour you work, with things that produce residual income, it can take weeks or even months to see results from work you did today. This is something that most people don’t have the patience for. If you are able to delay gratification and basically “work for free” and still keep up your enthusiasm, then you will do just fine but if you can’t do that, then making this type of income will be very difficult mentally.

2. Criticism from others

Believe it or not, the idea of retiring off of residual income is something that is foreign to most people. The way most people think is that you must work and put in time in order to make money, there is no other way. Of course, you and I both know that this is a false belief but because most people think this, many people will criticize you and even discourage you from taking this path. It can be for different reasons. Sometimes, it could be because they don’t understand how this type of income works and will therefore think that you are getting scammed somehow.

The crazy thing is that at first, they will have proof! Since it can take months or years before you make any decent amount of money, they can easily see you putting in work without having much in return and say, “I told you so.” This can definitely be discouraging but it’s just one of the hurdles that you might have to deal with. However, once you start making enough money, all of the obstacles that you had to go through will be worth it.

3. Unconventional

You won’t find many people pursuing this type of income so you might feel alone on this journey but keep in mind that retiring early is also unconventional. If you do what most people do, you’ll end up like how most people end up at the end of their work life, broke. Choose to take the path less traveled and you’ll be able to experience a life that most people can only dream of having.

Ways to Make Residual Income

There are many ways to build residual income. You can create a product, a song, a book, etc., and sell it and earn money off of the royalties. You can buy a rental property, rent it out, and collect money each money. You can start an internet business, automate everything, and walk away. You can start a traditional business, build it up, hire someone to run it, and be done. Obviously, some paths will require more time and money than others but either way, they beat having to rely on linear income.

The cheapest way to start making residual income is to create an internet business. All you really need to start is a website, hosting, and an idea. Of course, you’ll need to learn what to do as well.

Hopefully, you understand the power of residual income. If you do, you will realize that every spare minute you have should be spent on creating this type of income because it will be your ticket out of the working life. Think about all of the things that you want to do with your life. The things you want to buy, the places that you would like to travel to, the time you want to have for your family; all of this will be possible if you have passive income. Without it, you will be like most people who work until they are too old to truly enjoy life.

The sooner you start, the better. Seriously, life is too short. Read the other posts on this website to learn how to produce an online income with an internet business and put as much time and effort you can into it. You can learn from the best for free during the 1st month. Check out: The Keyword Academy

If you’re not doing everything you can to produce residual income, then you’re nuts. Financial freedom can be just around the corner.