Is it better to have residual income and not merely depend upon pay check income? The income earned privately coming from his assets is called as residual income. The current practice for people in earning a living is by getting a job and work either on an hour or annual basis. They have salaries or pay checks that they receive usually on a monthly basis and this allows them to buy the things they want, travel to places and maintain a regular lifestyle.
The joyful story ends where the cash has been spent already and people need to report back for work and continue with their current jobs again. Their pay checks do arrive again but so does the effort for them to continue working for that hard-earned money.
Aspirations for higher salaries by getting promoted in their current jobs or people prefer to aspire for higher paying salaries by changing jobs. One can get better education, maybe a post graduate degree and be assigned to higher management roles within the company. Their salaries become higher and their lifestyles become different.
At the end of the day, they still have to report for work the next day, get more worries and handle work pressure as they still have to constantly work their way on a day to day basis to enjoy the pay checks they’re receiving which allow them to enjoy and sustain the life-style that they want to enjoy.
This is technically the rat race and it’s a cycle in most people’s lives that goes on and on. The cycle of coming to work doesn’t end. This is because people will always have obligations to pay the bills, to put the food on the table and to simply enjoy a good weekend doesn’t end too.
So how will it be possible for anybody to get out of the rat race of working 8-9 hours a day? Is it possible to continue and sustain with the same life with the expectations of still having the ability to receive continuous income within the bank?
The answer basically lies with being able to create wealth for oneself not solely on the basis of becoming an employee and receive a pay check continuously but simply by being able to have income coming to the bank without necessarily working for it on an hourly basis.
Residual income, also what we call passive income generates income for an individual through his assets. The different examples of residual income are :
• Rental/real estate income,
• Interest and dividend income
• Income from the on-going sale of consumer goods
For people in the rat race cycle being able to save enough money or capitalize on a person’s talents and skills in order to bring in income consistently without returning back to work for good is the progression towards financial independence.
Entrepreneurs who started their business and capitalized on their business ideas that have begun to move towards success can expect consistent profits from their businesses. They’ll just need to hire effective managers and people that will continue to run their businesses for them and they can just expect their businesses to grow and receive profits from their business operations.
Residual income allows financial stability and freedom. Leverage your strengths and create a path that transitions from active to residual income over time to enjoy a tension and debt free life.