Imagine how your life would change if $10,000 were wired into your bank account every week, like clockwork, whether you were working, on vacation, or even just relaxing at home.   Imagine, over time, becoming debt free, but the money continues to arrive week after week. Imagine being able to spend unlimited quality time with your family or giving generously of your time or finances to your favorite causes.

The concept of residual income is both incredibly exciting, and, for most people, seemingly unattainable. I was introduced to the power of residual income in my early twenties, and it has had a life changing impact on all of my career choices since that time.

In this article, we’ll take a comprehensive look at residual income and view it from six main perspectives:

  1. Why we need residual income so desperately.
  2. What is residual income?
  3. How to create residual income.
  4. What the benefits of residual income are.
  5. Creating residual income through network marketing.

So, are you up for learning how to create unlimited residual income along with complete time freedom, exotic travel opportunities, profound personal growth, and a whole lot of fun? I thought so! Let’s get started.

First, let’s talk about why we need more residual income in our lives.

Why We Need Residual Income In Our Lives

As a former financial planner/investment advisor, I have had the opportunity to counsel a lot of individuals and families who were dealing with all sorts of challenging financial issues. So, even though I haven’t sat around your kitchen table, I have a very good idea of some of the challenges you may be facing.

According to a landmark Consumer Survey by the Certified Financial Planner Board Of Standards the primary reason that clients visit financial planners is to discuss their financial concerns which include: preparing for retirement, managing and reducing debt, building an emergency fund, building a college fund, saving for a home purchase or renovation, sheltering income from taxes, generating retirement income, providing for future medical needs, and, if there is money left, figuring out how to vacation or travel more.

The report goes on to say that 47% of consumers are technically classified as “Troubleds,” and they worry about debt, fret about financial decisions such as money for retirement, are not confidant in their control over their financial future, may have a financial plan but do not follow it, are often their own primary financial advisors, and, despite their discomfort, they are the least likely to have a plan!!!

Also, the report indicates that 69% of consumers don’t set measurable financial goals. Of course, we know that if people do not set goals, they will probably not reach them.

We also know that, according to Social Security statistics, out of 100 people at retirement age in America, only 2% are financially free. Out of the other 98%, 45% are dependent on relatives, 30% are dependent on charity, and 23% are still working.

To quote from the movie “Apollo 13”, “Houston, we have a problem.” Families today are dealing with uncertain career stability, lay-offs, the highest debt loads ever, rising costs of consumer goods, college education and health care costs that are spiraling out of control, worries about social security, and dealing with a highly volatile stock market. In short, many people are stressed out and see little hope of things getting better.

One of the biggest challenges that most of us face is that, in terms of our economic lives, we live in a world in which we trade time for dollars, which I sometimes call Economic System A, or “linear income.” Statistically, most of us work for a company or the government as an employee, and we receive money periodically for the time we spend working for that employer. We work, on average, 40 hours per week, and we generally get paid every two weeks, or perhaps once per month. The downsides are that, often, the salary is fixed, the raises are modest, and the person in the cubicle next to you, who is not working as hard as you, may make the same amount of money as you. The other unfortunate reality is that, when you are no longer working for that organization, they obviously no longer pay you.

The other challenge most of us face is that our financial lives are far more fragile than we care to think about. Far the most part, people feel very insecure about the fate of their employment. And they should be concerned. In this age of reduced corporate profits, mergers and acquisitions, and constant lay-offs, no one is as safe as they might think they are.

Savings account balances are low, families are consistently spending beyond their means, and most people, if they did not receive any money for six months, would be forced to seriously consider bankruptcy.

But, there are a small but powerful number of individuals in America who have discovered the secret weapon in the war against financial challenges. These smart and insightful individuals have learned and harnessed the awesome power of residual or ongoing income streams.

So, let’s take a little quiz to see if you are currently experiencing the benefits of residual income:

  1. Do you currently have multiple streams of income rather than relying on one main income source?
  2. Do you get paid multiple times for every hour you work?
  3. Are your hourly earnings unlimited?
  4. Are you creating income 24 hours a day?
  5. Do you own or control your income?
  6. Can you sell or will your streams of income?
  7. Can you give yourself a raise at any time?
  8. If your main source of income dried up, could you survive for a year on your remaining streams?

If you answered NO to any these questions, you are not realizing the full and life changing power of Residual Income.

What is Residual Income?

Residual Income (also called “passive,” or “recurring income”) is income that continues to be generated after the initial effort has been expended. Compare this to what most people focus on earning, which is called linear income, which is “one-shot” compensation or payment in the form of a fee, wage, commission or salary.

While linear income is directly proportional to the number of hours invested in it (40 hrs. of pay for 40 hrs. of work), one of the great advantages of residual income is that once things are set in motion, you continue making money from your initial efforts, while gaining time to devote to other things… such as generating more streams of residual income!

There are a variety of ways residual income can be earned. The following are some examples.

  • You could transfer the rights to a book you wrote, a software program you created, a gadget you invented, or a song you recorded, to a company that agrees to pay you a percentage of each copy of your work sold in the future.
  • You could become an actor and draw residual income from each of your movies, TV shows, or commercials, each time they run.
  • How about letting an oil company drill a well on your property in exchange for a percentage of the revenue.
  • You might purchase an office building or other real estate that earns you recurring income through lease or rental payments.

While these strategies sound exciting, the problem is that earning residual income from the methods I’ve just described generally aren’t that easy to implement, due to ability or investment limitations.

More attainable for the average person would be the opportunity to build up an investment “nest egg” that could provide residual income through interest distributions. So, let’s review that option.

So, let’s say you wanted to have $100,000 per year of interest income coming in from your investments. At 5% interest, you would need to have about $2,000,000 in personal investments. Perhaps you do not have that much in an account yet. So, let’s say that you would like to accomplish that goal in twenty years, to help supplement your retirement income.

To accumulate that much over the next twenty years, and if you started with no money saved, and if you could earn 8% interest on your money, you would need to save a little over $40,000 per year starting right now. How are you doing on your goal?

There’s not much time left for sleeping if you’re working three eight hour shifts a day to earn that kind of money! What we find is that most people are working themselves to death in Economic System A but not getting ahead. Can you relate? And, even if the heavy workload works and you generate significant amounts of money, you end up having no TIME for your family and life. IP address location Of course, if a person does not work very hard, they may have TIME, but no MONEY. Ideally, you create a life that provides you with both TIME and MONEY!

The “First Rule” of achieving Residual Income Success: You want to avoid or limit your involvement with linear income opportunities.

How To Create Residual Income

As we look at the best ways to create residual income, found in the wonderful world of Economic System B, let’s review two key wealth accumulation strategies.

First, in the book, “The Millionaire Next Door,” by Thomas Stanley and William Danko, the researchers found that three out of four American millionaires owned their own business. Not that you cannot become wealthy working for someone else, but you usually have more opportunity and greater potential in your own business.

Secondly, J. Paul Getty, in his book, “How To Be Rich,” states that to become wealthy in your own business, you must have:

  • Product, Service, or Idea
  • The product must be Consumable and Renewable (People need, want, use up, and come back for more.)
  • Duplication of your own productive efforts. That is where most people fall down. He said “I’d rather have 1% of the efforts of 100 men that 100% of the efforts of one man. Why? Leverage. Key Point: Leverage Is The Secret Of Wealth.

The challenge of starting a traditional business, however, is that the owner has to deal with major issues like long hours, specialized knowledge, significant upfront investment, inventory, accounts payable and receivable, employee challenges, and with all of that, a low national success rate.

So, what if our goal was to create the effect of that $2,000,000 financial asset we mentioned earlier? And, what if we could create it in only 2 to 5 years, with a part-time effort, and an initial investment of less than one mortgage payment, and without all of the hassles of starting a traditional business? We can create the same or even better Residual Income through Network Marketing.

Creating Residual Income Through Network Marketing

What is Network Marketing? First, understand traditional marketing. Let’s say a product cost $10.00 in a retail store. A company’s real cost to manufacture the product and pay overhead, is, on average, around $6.00. The other $4.00 is spent on advertising and distribution. In network marketing, companies market directly to the public, and cut out the advertising and middlemen costs. That leaves around 40% to be paid to the individuals who are involved in the marketing and distribution of the products.

But, what is even better, is that a typical Network Marketing payment arrangement is designed to pay you to build a “network of marketers and consumers” and the more people that you are able to attract to the opportunity, the more money you can make. But, the even better news is that once you get your network started, it tends to take on a life of it’s own, and most of the growth will be developed by people that you may not even know today!

You may have heard that the “eighth wonder of the world” is compound interest. Here is an example: $200.00 per month invested for forty years would equal $96,000.00 of contributions. But, if you never touched the money, and you earned a 10% compound interest rate, you would have $1,264,815 in your account, or over 13 times what you actually invested.

With Network Marketing you can have TIME DUPLICATION that works the same way!

Let’s look at how that could work for you in a generic example:

  • First Month, you generate $500.00 in product sales and you sponsor five people who create $500.00 per month of product sales volume. That equals $3,000 in total volume, including your $500.00.
  • Second Month, those five each maintain their sales volume and sponsor five people who create $500.00 per month of product sales volume. That equals $15,500 in total volume, including your $500.00.
  • Third Month, they each maintain their sales volume and sponsor five people who create $500.00 per month of product sales volume. That equals $78,000 in total volume, including your $500.00.
  • By the way, if each person worked just five hours per week in this business, you would be reaping the benefits of 3,120 hours worked per month in your business. By contrast, most people work about 2,000 hours in an entire year!
  • The three most amazing things about a system like this is that a) the sales volume can happen very fast, and b) you will be paid an increasingly higher income on the ENTIRE volume created by your organization as it grows, and not just on the volume you personally create. And, c) this growth in organization and volume, once set properly in motion by you, will tend to increase over time, and continue to pay you royalty income month after month, whether you are home, on your yacht in the Caribbean, or at your mountain home in Aspen, Colorado.

Interestingly, I spoke with one Network Marketing leader who shared with me that if she took her monthly income and divided it by the number of hours she works her business on average each month, she is actually earning about $500.00 per hour for her time. Wow! Are you receiving hourly wages at that pay rate?!

To further discuss the concept of LEVERAGE, let’s look at three professions and assume they each make a 20% “commission” on the sales volume they bring in for their employer.

  • If a shoe salesman sells a pair of shoes for $100, he would make $20.
  • If an attorney bills $500 per hour, she would earn $100
  • If an actor stars in a movie that makes $100 Million, he would receive $20 Million

Key Point: The income you will receive in life is not necessarily based on “hard work” but rather on how much “economic value” you bring to the organization you are associated with. The more “economic value” you create, the more income you receive.

Therefore, to make a large income, you need to use leverage.

The Benefits Of Residual Income With Network Marketing

The main benefits of Residual Income with Network Marketing include:

  • Low start-up cost
  • Pattern of Success that is already established – simply sign up, learn, and grow
  • Motivation and Excitement
  • Team success approach – In business for yourself, but not by yourself
  • Incredible time duplication
  • Reduced stress in life
  • Your business can be, after reaching certain levels, willable to your family
  • Major tax benefits of owning and operating a home based business

As you can see, residual income is a very exciting concept, and it will change your life immensely once you are benefiting from it.

If you have not already made a decision to pursue residual income opportunities, I encourage you to make it today! Decide today to become financially free and begin to experience the amazing power of residual income in your life.

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