When It Comes To Money And Time, Everyone Wants More Of It.
People around the globe are trying their hardest to earn more money. We work every day, sometimes over 8 hours a day, and for what? To pay rent, pay loan installments, a car note, and entertainment? There must be more to life than this. Is there a better option?
Of course! There is a multitude of ways to make money while you sleep. And ultimately, if your goal is to reach financial freedom in your life, understanding the concept of residual income will come in handy.
What Is Residual Income?
Residual income is money that you make on autopilot—with little to no work after the initial setup.
Residual income also happens on an on-going basis. I like to call it “mailbox money.”
When you work for an employer, your time and labor are your main inputs. You use one hour of your time and get paid for one hour's worth of work. That is trading your time for money.
The distinction here is that with residual income, you’re using time to create passive income but your time isn’t necessarily the limiting factor in creating it.
Instead, different factors may limit how much residual income you can produce. Once that factor is removed, you still have the same amount of time available. Then you can put all of it towards creating more residual income, once again, without having to do anything extra. That’s what makes it residual!
For example, if you write an ebook, sell it for $10, and sell 100 copies, you’ll make $1,000. But once you’ve finished that project, you’re not done making money on it. You will sell another 1,000 copies at $1 each ($1,000), then you’ll make another $1,000 again as residual income.
The key takeaway? There’s no limit on how much money you can make from a single project or idea. You just keep reusing them repeatedly to make more and more income from each one. This is how many successful people operate; they find one successful idea or product line and build everything else around that idea or product line.
The same idea applies to owning real estate, particularly apartment buildings. If you're a passive investor, you would align yourself with a firm that can invest your money into their properties and issue you distributions on your investments throughout the year. Your money is now working for you rather than you working for your money.
Become Financially Savvy
Here are the tips to start thinking differently about your money.
Create a Budget
Create a budget, and stick to it. Don’t be afraid to cut out things that aren’t necessary. If you’re trying to make money while you sleep, you need to free up money to pour into assets that can produce income for you.
This means cutting down on unnecessary expenses and thinking more creatively on how substitute things. Rather than buying expensive coffee or eating out everyday for lunch, you can make coffee at home and meal prep for lunch. The idea is to know where your dollars are going and be able to allocate a budget for investing into income producing assets.
Figure Out What You Already Have
Most people focus on what they don’t have, and yet many already have a lot of what they need to be successful. They just aren’t aware of it.
Try this exercise: Take a look around and see what you have in your home. Make a list of what you could sell, then plan to do a garage sale or upload the items to craigslist or offer-up. The proceeds from your sales can go into your investment bucket.
Save 10% of Your Income
Save at least 10% of every paycheck you receive and put it in a high-interest savings account. This means, at the very least, your money can incrementally grow.
Automate Your Savings
Set up your bank account to automatically transfer money into a separate savings account every month. Then you won’t even have to think about saving, and the money will have time to grow on a schedule that works for you.
Put the Money to Work For You
Now that you're managing a budget and have extra money to invest, don’t put all your money into one bucket. Spread your investments across several ventures.
Make Investing a Priority
When investing into assets is a priority, you'll see things differently. The more you can reinvest into passive (and residual) income producing ventures, the faster you will achieve financial freedom!
Here Are Some Ideas to Make Residual Income:
1. Rental properties–When you own a rental property, you can use the income your tenants pay to offset expenses, including paying off mortgages, taxes, insurance, maintenance expenses, repairs, and other costs. Ultimately, the more “doors” you own, the more passive income you'll make after expenses. Sidenote: This is our favorite way to make residual/passive income. If you want to learn more, opt-in for our FREE resource here: https://themichaelblank.com/vault
2. Dividend income–Publicly traded companies sometimes pay dividends to the owners of their shares. These dividends, or payments of a portion of a company’s earnings, can help fuel growth in your investment portfolio.
3. Interest income–If you lend $20,000 to a borrower at 10% interest, you can earn $2,000 over the course of a year. There are many ways for you to become a private lender, but it’s important that you do your research and know how much risk is involved.
4. Affiliate marketing–Affiliate marketing is great for generating residual income, especially with software or programs that are monthly subscriptions. As an affiliate, you can get paid whenever the customer you referred pays their subscription bill each month.
5. Royalties–If you’re musically inclined, it’s possible to earn royalties for songs, music, and albums you’ve written. Royalties can also come from repurposing your music for movies or commercials. Similarly, writers and directors can earn royalties as well.
6. Start a blog, or advertising revenue–Building your own blog can help you make some money. You can earn residual income from advertisements, sponsored posts, or selling your own products and services. You can also generate traffic to your website by writing articles that may rank well with Google for relevant keywords and phrases.
7. Online courses–If you’re an expert in a niche, you can make money by creating your own online course and selling it as a digital download or even through an online marketplace. Creating an online course takes time and effort, but the payoff could be great.
8. Recurring online sales–If you have a talent for creating images or videos, or if you can design templates, other graphic designers will find it useful. There are many sites online where you can sell these items in order to make money passively.
In Conclusion
Residual income is a powerful way to build wealth and achieve financial independence. Take the time to learn what works best for you and start investing in your future.
The sooner you start, the more time it will have to grow and compound for you.
