Linear or Residual Income?

What do you do for your living? Have you ever think of the type of income you are getting at present? Here, I am talking about two types of income, the linear income and residual income. If you only get paid once for every effort of your work, then you are earning a linear income. In other words, you will not be paid if you don't work. It is different from residual income where you can earn a recurring income for months or even years for the same effort.

Everyone of us has a way or still looking for a way to earn money. If you were to observe people around you, the type of income they are earning is mostly salary based income, which is linear income. Take a wild guess, this is because many people gone through the same money earning formula. Majority are looking for their first job after graduated and getting paid a salary. Then, they start looking for extra income by doing some part time jobs or businesses. Here comes the crucial decision making on selecting a part time jobs or businesses that can eventually growth your income substantially in the long run. You will have to judge which type of income you will be getting, linear or residual income?

If you are looking for a part time salary based job, you are not going any further in growing your income in the long run except that you have temporary created additional linear income on top of your existing linear income. There is only 24 hours in a day. How many salary based part time jobs you are able to work? So, you see the limitation. Yes, I agree with you that you can earn more money and grow your income stream. However, this is short term and it is not a steady income. If for some reason in the future you stop all your part time jobs, all your part time income streams will be halted too.

Let's look at part time business. It can be selling a product or offering a service. However, the revenue generated for both activities can be either linear or recurring income for you. In linear income business, you earn money just one time from the customers who pay you money (it may be the last payment from the customers too) in exchange for the products or services that the customers want, such as selling books, computers, foods, clothes, cars, mortgages and so on. That's the end of your earning story with the customers after the complete business deal. Whereas, in residual income business, you earn money through recurring payments from customers on weekly, monthly or even yearly basis. These customers pay you as long as they continuously enjoy or retain the benefits that you offered to them at the time you done your first selling to them. In other words, you have contributed your effort once, and you enjoy the return for the same effort many times. Below are some typical examples of residual income businesses:

- Real estate owners get recurring rental fees.
- Insurance agents/brokers get recurring plans renewal commissions.
- Network marketers earn recurring products sales commissions.
- Franchisers get recurring franchising fees.
- Inventors, authors, artists earn royalties from their products sold.
- Software creators get recurring royalties from users.

The more effort you work in creating residual income business, the more income growth you will get in return. In the future, if it happens to be you want to take a short break out from your businesses for two weeks. Your residual income businesses will continue for that two weeks, so as your incomes. At this point, have you ever think of taking an even longer break? I believed you can do that once your residual incomes grow substantially. As you can see, more residual incomes mean more time freedom for you. How many percentage of your income is residual income? No worries if all you incomes are linear income. Start building your residual income today and you'll be enjoying your life with more time freedom.