Residual income

Residual income refers to earnings after bills and other necessary expenses have been subtracted. Maintaining a steady stream of this may prove useful, as banks and other loan agencies normally check the borrower’s residual income. This is to ensure that there will still be enough funds left to make the amortization per month.

Residual income is also often used interchangeably with passive income. This is income that continues to be produced after one exerts the initial effort required. As such, one continues earning while being freed up to engage in other activities or financial endeavors. Unsurprisingly, financial advisers often recommend finding a source of residual income to ensure one’s financial security.

There are various ways in which residual income can be made. It may come from royalties of a book one has written, or any other intellectual property sold to a publisher, producer, or similar company. It may also be earned from investments made or by engaging in network marketing activities. These may require one to recruit members or sales representatives who then generate commissions.

While not a new concept in itself, initiatives for earning residual income have been increasing in popularity and appeal with the expansion of options on the internet. One can host a site and earn extra money depending on site traffic and the number of times visitors click on links of participating sponsors. However, it is necessary to exercise caution, as the frequency of internet fraud continues to increase as these options entice more participants.

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