A Guide to Residual Income
Residual income, often known as passive income, is money that you receive from a business or asset well after the initial time or monetary investment is over. It is usually an income that is fairly reliable and paid to you at regular intervals.
This type of income is powerful as it breaks the direct tie between time and money. The more common income model revolves around exchanging time for money, most jobs work on this basis. This model leaves many people with a fixed income potential and like a rat on a wheel, never making any real progress. Residual income usually involves a large time, effort or monetary investment from which you reap the rewards long after the investment is over, leaving you free to create your next residual or passive income. It allows you to scale up your earnings and create time freedom.
Some people build residual incomes as a back up to their main income. Others do it to build a pension. Residual incomes are often passed on to children in a will, eg properties, royalties etc.
The sooner you start creating your residual incomes the better. The first one can be incredibly hard work as most people do it alongside a standard ‘time for money’ job, but once you have the first that becomes the cash cow that gives you the time to create others.
Here are some ideas for residual incomes;
1. A blog or website
Websites take a while to build up but the maintenance can be as little as a couple of hours a week. My parenting blog www.littlemummy.com forms an important part of my cash cow income. I started the site almost seven years ago and as well as incredible experiences it has provided me with the income to free up my time and create other products.
The residual income comes from advertising and affiliate marketing.
2. eBooks and Books
Once I had the first income going I had the time to write a few eBooks and a couple of books. Unless you have a bestseller, books don’t make too much money. However with residual incomes it doesn’t matter so much. I do the work and even if it makes a few pounds a month that just adds to the pot and I move onto the next income.
3. eCourses and membership sites
After an eBook or two I went on to create lots of eCourses and a few membership sites. It’s a big undertaking to create a good eCourse, but I had the time and space as I had the other incomes to support me.
Other residual incomes that I haven’t tried yet but may consider in the future include property rental and investments.
My goal is to create financial independence as laid out in the book Your Money or Your Life. Once I have paid off my mortgage my aim is for my residual incomes to cover the rest of my expenses. This will create time freedom, we can choose what work to do and not have to factor in money at all.
When looking for residual or passive incomes focus on playing to your strengths. Get into the self employed mindsetand be ready for some hard work.
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