Posts Tagged ‘positive cash flow’

18 Types of Residual Income

September 23, 2011

When deciding how you would like to structure your personal finances with multiple streams of income and you are a full-time worker, you may wish to supplement your income with a second job.  However, just like your first job, your salary will still be subjected to income tax.  Moreover, the salaries from both of these jobs are considered linear income.  What you would like to do for yourself instead is earn residual income.

If the "linear income" you are earning from your day job is not enough, you should look into one of these 18 types of residual income to help you gain greater financial independence.What is linear income? It is the income you are earning from your full-time or part-time job.  With this type of income, the amount you earn is tied to how much you work.  The more you work, the more you earn; the less you work, the less you earn.  Let’s face it.  Sick time, vacation time and PTO can only cover so much of your off time before you start not getting paid for not working.

On the other hand, residual income (also known as “passive income” or “royalty income“) involves doing the work once and being paid for this work many times over, over a period of months or even years.

From the viewpoints of residual income, many types of professionals are not as wealthy as they appear.  Doctors, dentists and chiropractors only see a fixed number of patients per day.  Salesmen can only speak to so many potential customers per day.  Attorneys can only meet with so many clients per day.  Overall, these professionals are earning a linear income.

Because a linear income shows almost immediate results, people tend to get caught in the trap of viewing a linear income as being of little value to them.  For those who would genuinely like to live off a linear income in the future, the hard work must be put in now.  Once you’re working a steady job with a linear income, you can begin working on your plan to create a stream of residual income, setting aside two to four hours after work each day or part of your weekend to make this dream a reality.

If you do not know the types of residual income you can earn, here is a list to get you started:

Believe me, this is not an exhaustive list of the types of residual income you can earn.  Nonetheless, if you ask yourself this question right now, “What percentage of my day did I spend creating residual income?” and your answer is zero, you may wish to spend this evening or the weekend examining how you can turn residual income into a second source of income for you.  But as the saying goes, “Rome was not built in a day.”  With careful, consistent, and persistent planning, the royalties, profits, fees, or revenue earned from your endeavor will earn you residual income for years to come.

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Francis Unson