Today, I want to take a few moments and educate you about the difference between linear income and residual income, so you have a better understanding of the two different ways of making money. I also want to educate you about different ways to earn a residual income. We’ll also talk about the pros and cons of each.
Linear income is income you receive for working a specified amount of hours. Basically, you are trading hours for dollars. You go to work, you get paid. You don’t go to work, you don’t get paid. People who earn linear income are people on a salary, hourly workers, most commission based salespeople, most business owners, or ANYONE else that MUST physically go to work to earn their money.
On the other hand, residual income is income that you earn over and over from doing something one time. Examples of residual income can include income from insurance premiums, network marketing, royalties from books, inventions and intellectual property, franchising fees, etc.
Most people just starting out in life will typically earn a linear income. In fact, most people will earn a linear income their entire life. Once again, there is nothing wrong with that. The major benefit of a linear income is that you can earn immediate income to pay your bills and survive. You work 40 hours and get paid for 40 hours. It’s really that simple.
The major drawbacks of linear income is that if you don’t WANT to go to work, or no longer can work (injury, too old, etc.) you can no longer make money. There’s nothing wrong with linear income UNTIL you want a few months off, want to retire, or you get sick! When that happens, you’re really in a bind.
Most people have only been taught how to earn a linear income. I can’t speak for you, but I never received even 15 minutes of instruction about residual income in high school or college. I never even received one hour of instruction on how to start my own business.
In fact, most people are programmed from an early age to be an employee. Go work for a big company (or the government), with good benefits, and work until they make you retire. Once again, there is nothing wrong with being an employee, or earning a linear income. We need people to fill jobs. I understand people need IMMEDIATE income to pay their bills.
But what if there was a better way to earn money that no one ever told you about? What if you could create your own residual income with a part-time effort?
I truly believe that anyone could create a residual income part-time WHILE they kept their day job or linear income. No, it doesn’t have to be network marketing either. You could write a book to sell. You could patent a product. You could become a part-time insurance agent. You could purchase real estate investments. You could create music. You could do countless different things.
The reason I typically recommend network marketing is because it’s much easier to do than most of these other things. It’s probably the easiest way to create a residual income. Most people will never write a best selling book or create an invention that pays them life-long royalties. Most people won’t have the money to purchase real estate investments. But, I truly believe that ANYONE can build up a residual income of a few thousand dollars per month within five years of part-time effort in network marketing.
Stress the word (five years). This is not a get rich quick or fast way to build up a residual income. To the best of my knowledge, there is NO fast or easy way to build up a substantial residual income. It takes time, effort, money and some patience.
Some will argue that it’s not possible for the average person to build up a nice residual income working part-time, but I disagree.
At the end of the day, I believe that EVERY person in the world should have a linear income and a residual income. They should focus on their linear income initially, but they should also invest at least five to ten hours per week to build up a residual income, so one day in the future they can have more time and more money.
What are your thoughts? What do you think about linear income and residual income? Leave a comment below to let me know what you think. I look forward to hearing from you.