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Residual Income: What Is It and How Does It Work?

The sure way to achieve financial freedom (and it is within the reach of most people, is to have a residual income or passive income. That is an income that you don't have to work for each month.

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What is residual income, and why would you want to increase it? In other words, residual income is income that comes in even when you are not working. Residual income, also known as recurring income, can be defined as an income that is continuously generated, on a regular basis, even after the person has ceased to being directly involved in the initial work that generated it in the first place.

Essentially your are creating more time for yourself while increasing revenues. Since a person with a residual income is not directly involved in work to generate it, it has an edge over the linear income - income from a paycheck.

Type of residual income

  • Income from renting out property
  • Income from a business managed by a third party
  • Royalties
  • Internet advertising revenue
  • Commissions from working as a PEO broker

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