Ever heard of residual income? It’s a concept that surprisingly is largely unknown in the traditional business world.
If you’re reading this and shaking your head wondering what exactly residual income is, you’re standing in the shoes that I was three years ago. It’s one of those concepts that should be taught by every teacher in every school, but oddly is not. Maybe it has to do with schools prepping students to get a job working for someone else… After all, employees don’t need to know about financial freedom and ways to manifest it, otherwise they wouldn’t be employees very long!
The concept of residual income is fairly easy to explain, but can be a bit tricky to successfully create. My favorite example to use is the music industry.
A musician writes a song and records said song. Once.
The record label of the musician then distributes the music to music stores all over the world. When someone buys the song the musician receives a portion of the sale. Over the next year thousands of people buy the song and the musician receives a portion of the thousands of sales. This continues forever.
Odds are that the musician isn’t going to write and record just one song. They record another and another and another, all the while continuing to receive profits every time each song is purchased.
Are you starting to see the potential here? The work is done ONCE, but profits continue due to a system of automation (record labels producing music and music stores selling it).
This is a form of leverage.
The type of income that most of us are familiar with is known as linear income. This is your traditional 9-to-5, work once get paid once income. This type of income is where the term “wage slave” comes from. You can never make more money than the hours that you have in the day to exchange for it. Once those hours are gone, so is the ability to earn more.
Notice how the linear income arrows repeatedly rise and drop after a period of time. This is a visual representation of a 40 hour work week. After you work that 40 hour week you get your check and BAM, it’s right back to square one.
Now take a look at the blue residual income arrow. At the beginning it grows slower than it’s linear cousin, but as time goes on momentum begins to multiply past effort exponentially.
Of course creating these streams of income can be tricky. Most people end up becoming their own worst enemy, not through any fault of their own but out of a reflection of the way most of us were raised.
The majority of Americans (myself included) were beat upside the head with “go to school, get good grades so you can get into college, go to college so you can get a good, stable job, get a job with a good company and work your tail off for them for the rest of your life” mantra.
We were raised to be employees.
How many people do you know that are financially free and working for someone else?
Thinking like an employee and not like a boss is the surest way to cut yourself off at the knees before you even start attempting to build a business. Whether you realize it or not, your perception, the way you think, has a direct effect on your cash flow.
If you’ve already downloaded our free ebook, then you’ve already learned several essential exercises to help convert your mindset from one of an employee to one of an entrepreneur.
We wrote our ebook, Point-Blank, Period., specifically to help instill the mental fortitude and entrepreneurial mindset needed to shrug off the early bumps in the road that cause so many to give up their dreams early on in their journey.
If you haven’t yet picked up a copy, scroll to the upper right of this page, enter your name and email and get yourself one. You’ll also receive updates directly from us on the latest business strategies and tools, as well as a regular top-off of your motivational tank.
If you’re already working a home business you’ll find what we discuss essential to taking your business to the next level and beyond.
Many of you may just be looking for a way out of a J.O.B. but don’t know where to start. Entrepreneurship can be horribly confusing when you’re starting out and don’t have the support of someone who’s been there and made it work.
Here’s a simple question that will start you off in the right direction.
If money was no object, and I mean none at all, what would you devote your life to? What do you feel is your life’s purpose?
I’d like you to take as long as you need to think about this question. When you have an answer that makes you emotional than you’re probably very close.
To discover what your passion has to do with becoming financially free and never working a day in your life, come on over to my post, When Passion Meets Profits.