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Why Do You Need to Earn a Residual Income?
Posted On September 24, 2010
Why Do You Need to Earn a Residual Income?
I was thinking the other day, about how important it is to be earning a residual or a passive income. At one point I was all set to continue with my corporate career for the rest of my life, relying on my pension to see me through!!! I now realise what a mistake that would have been!
One of my key goals now in life is to make my living by earning a residual income. My husband, Alec and I have realised that the way to make serious money is not by working for somebody else. We have done a lot of reading and research on the subject and know that this is the way that we want to build our future.
I looked up the definition of residual income in the dictionary and it came up with:
(Also called Passive Income) is income earned on an ongoing basis for effort done once in the past.
Now I like the sound of that!! So this means you put all the work in up front, but then get to relax and enjoy the money later on. I also checked out the definition of Passive Income on Wikipedia and it stated:
Passive income is a rent received on a regular basis, with little effort required to maintain it. It is advocated by some authors, especially by R Kiyosaki.
Some examples of passive income are: Landlord Income; Writing a book or a song; Inventing something that requires a patent; Earnings from affiliate schemes; Interest from shares; Pensions
It was because of reading a Robert Kiyosaki book that I realized that I had to earn a residual income. I had stumbled across a Network Marketing company and joined, they recommend that I read Rich Dad Poor Dad. I hadn’t been big into Personal Development until this point so I hadn’t even heard of him.
He explained the subject so well. He described how when you’re an employee you are working towards somebody else’s dream. When you stop working you also stop getting paid. You are basically trading time for money. This is the same for people who are self employed, if you are a one man band, once you stop working nobody will pay you.
Kiyosaki talks about the importance of moving to the B Quadrant (Business); this will ensure you will earn a residual income. I started to think about all the ways that I could make a residual income:
· Rental from property: this is a good option, although the market is pretty volatile at the moment. You also have to have some up front capital to put into this, so it’s a bit of a risky option.
· Royalties from a book or a patent: I’ve always fancied writing a book, but actually doing it is another matter. This would require a lot of time and discipline and actually some talent as well. Writing songs would come under this category also, but I’m probably not very good at that either! I also hadn’t come up with any good ideas that could be patented either
· Earnings from affiliate schemes – this is a good option, you would just require some internet marketing skills to get started with this one.
· Earnings from a business that does not require direct contact from the owner. Now this sounded good to me!! I’ll talk more about this later.
· Stocks and bonds ownership: Again a good option but you need two things – knowledge and capital. As I said before the market is pretty volatile too so probably not the best time to invest!
· Pensions – a good option if you can wait that long – I’m impatient, so not a good option for me!
So the method I wanted to talk more about was earnings from a business that does not require direct contact from the owner.
I would consider Network Marketing as a way to create one of these businesses. It allows you to start a business and move from the E (Employee) Quadrant or the S (Self Employed) Quadrant into the B Quadrant. In an article by Kiyosaki and Donald Trump, Network Marketing is described as being a business for people who want to change their lives!
They recommend Network Marketing as a great way to get the skills and attitude for the B Quadrant. Being in business can be very tough which is why the majority of businesses fail. However in Network Marketing your chances of success are greater. I say this for a couple of reasons; firstly it is a great way to build a residual income business without investing huge amounts of time or money.
You can also build your business in your spare time around your job or your current business. You build it once then relax and reap the rewards. You are also earning money from your business whilst you’re building a residual income. Most businesses take years to break even never mind make a profit.
Another great thing is that when you join an MLM business you work with a Mentor. This automatically increases your chance of success. When you’re working with somebody who has been there and done it already, you can learn from their mistakes and their successes. Napoleon Hill talks about creating a Mastermind Group around you; this is what you do in Network Marketing. You work with your sponsor, upline, downline and sidelines, you can achieve more as a group than as an individual. You’re working towards one common goal – this is very powerful.
So just to sum up, I believe that it is very important for everybody to be building a residual income and for me a network marketing business was the best way forward. I would strongly suggest it for anybody.
by Julie Hanson, (c) 2008
ABOUT THE AUTHOR Julie Hanson coaches people on how to work
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Robert Kiyosaki video explaining the cashflow quadrant. Robert KIyosaki is the best selling author of Rich Dad Poor Dad, Cashflow Quadrant, and Why We Want You to Be Rich. Why Network Marketing and Direct Sales?