Linear income vs Residual income
There is a question at the end of this article that you must ask yourself.
Let’s take a look at both kinds of income and find out which is better.
What the heck is linear income, anyway? I had no idea that it was called linear income, but this is what you get if you have a regular job. You trade your time and labor for money.
You have to go to work for someone else every day. There is a preset number of hours that you have to work each. If you have your job long enough, then you probably have qualified for a certain amount of time off for vacations. Most employers also give an employee days off for holidays as well. You may also get a few days off as personal days. You might even get promoted and get pay raises depending on your performance. Your employer may even have a retirement plan for you. It will probably be a 401K plan.
As long as you are willing to do the work that your employer needs you to do, you will continue to get paid.
If you are earning money through the linear income model you are probably are making enough money to own your own home, in a decent neighborhood. You can probably drive a nice car, too
It sounds good so far, right?
Those are the good things about linear income.
The downside of linear income is that if you stop working, your employer stops paying you. Don’t forget that you may stop working because you get laid off or fired.
Let’s look at residual income.
What the heck is residual income, anyway? You get paid residual income, sometimes called passive income, for work that you have already done once. If you happened to have written a hit song that gets played for years after it was written, you would continue to get paid a royalty, or residual income. The same is true if you have written a best selling book. As long as someone is still buying the book you would get paid.
That has to sound pretty good, right? You do the work one time and someone sees fit to pay you forever!
You could have the rock and roll lifestyle, just like Paul McCartney or if you’re not that old, Adam Levine. If you’re old you probably have no idea who that is. You’re in charge of your life, your time and your income.
Those are the good things that could come from residual income.
The downside is that you might be a one hit wonder or worse, a no hit wonder where they are now. In which case you’ve probably gone back to making money the linear income way.
I know you’re thinking that only a few special people with a lot of talent can write hit songs or best selling books. I can’t argue with that. You just need to look at the 12 winners of American Idol. Can you name all 12 of the winners? Maybe a die hard fan can, but I would think that a casual viewer would have a hard time with that task. Not many of those talented kids are household names.
If you aren’t one of those few talented people, what else can you do?
There is an option called network marketing. Network marketing actually offers both kinds of income. You can earn linear income by selling the products or services that your company has to offer. This can turn into residual income if your customers continue to buy the products long term. You can also bring other distributors into the business. As you do that and they are selling your company’s products or services, you get part of what they sell as a commission. This is also residual income. If you get enough people into the business then this income can become quite substantial. You don’t even need to do all of the work yourself. You will get credit for the work of the other people that you brought into the business.
We can compare the two types of income.
Linear income is fairly easy to get. Just find a job and you will get paid. Your income will be limited by your ability to perform the labor that your employers needs done. It will also be limited by the going rate of pay for your particular job. If you are flipping burgers at a burger joint, you probably aren’t going to get paid $100,000 per year. You can make decent money in the linear income plan. It is unlikely to be rock star money.
Residual income is often more difficult to obtain. The pay is not guaranteed. However, you are in control of the amount of money that you make. If you’re not making enough money then it is because of you. You either didn’t know what to do or you didn’t know how to do the work. If you are able to do well in the residual income plan, you can have that coveted rock and roll type lifestyle.
Which is better?
That depends on you. If you can learn what to do and how to do the work involved in building a residual income then you can hardly beat it. If you aren’t able to learn how to do these things then the linear income model is probably a better option for you.
Do you think that you could learn what to do and how to do it, in order to build a life long residual income for you and your family?
If so, contact me: richard[at]richardbrokenshire[dot]com
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