I want to clarify the difference between passive income streams and residual income streams. They are similar in many ways and there is going to be a lot of confusion here if I don’t do a proper job of explaining things.
Passive Income Streams
Passive income is income you don’t have to work for like investing in the stock market (there is some risk there but it’s a good example) where you just get a return and you don’t have to do anything. The best example is putting your money in a savings bond or certificate of deposit. With bonds and CD’s you put money in knowing you will get say 6% back, that is 6% that you can get the rest of your life, that’s passive income.
Passive income is what we are all working towards. Because once you have enough passive income to cover your lifestyle you don’t have to work, money stops being an issue, unless you want to buy something expensive like a boat. Once you establish enough passive income you can just live your life and do pretty much whatever you want when you want.
Once you establish enough passive income you can just live your life and do pretty much whatever you want whenever you want.
Residual Income Streams
Residual income is income you make when you’re asleep (I love that definition), or more simply, the continuing revenue you generate after the work is done. Residual means you have to work a little but technology and residual income can go hand in hand. Youtube, for example, is a stream of residual income for people who create entertaining or valuable videos. A blog is another good example.
Payroll Income Stream
Notice how this one isn’t plural. Payroll income is income you earn while you work whether your paid salary or hourly. This is the one stream that almost everyone starts off earning. For many people, this is also the only stream they ever know. Sure you could get a second job but what fun is that? You would have no time to build your own lifestyle. It’s the ones who believe in themselves get clear and take action that are able to break free and create multiple sources of income. What I’m talking about is here building your own business on the side, one you actually enjoy. There is a way out of the “rat race” and you don’t always need money to make money, the internet is full of ways to raise capital for your business venture.
Who’s the Winner?
Obviously, passive income is the winner. Passive income takes very little to no work to keep earning. Residual comes in second and payroll in third but diversity is the real winner! Multiple streams of income from different areas can add up to a steady flow of income that will help you get out of debt and on your way to living the lifestyle you are looking to live.