I like residual, or passive, income because it offers the possibility that my annual income could become my monthly income. Even if it took 3, 5, or 7 years, it would be worth it. If the possibility to earn in a month what I could earn in 12 months became my goal, therefore my focus, it could also become my reality; your reality as well. The principal obstacle for most of us to create passive residual income is in overcoming a traditional mentality about how we earn “real money.”
Creating a continuous stream of residual income as part of a retirement strategy should have particular appeal among a broad section of the population. On a personal note, I would want to know more if I were one of the categories described in “Rich Dad, Poor Dad” by noted business author Robert Kiyosaki.
A logical launch point to consider how to generate a passive residual income is to ask yourself the question, are you satisfied with the good (income and lifestyle) you currently receive? Many, if not most, according to job satisfaction surveys I have seen, are not. If you are among them, ask a related question: Do you see yourself as an effective part of the process that creates a different financial future than the one you currently anticipate? Put another way, what are you willing to do today to explore how you, too, can create a passive residual income. Remember, this is all about seeking information to expand your range of options. If not, your lifestyle will be characterized more by its financial constraints and your retirement options are likely a) a limited employee pension provided it is available; b) company downsizing with a lump sum payout; and, c) the offer of your company to purchase an annuity from an insurance company. The latter two options have high risks and the devil is in the details. If you are among the 1 percent intrigued by the title of this article, stop reading and head on out to the golf course for an afternoon round.
On the other hand, if you see yourself as the principal architect of a plan for more stability and growth in your personal or family finances, you need to begin now to explore the various ways to create passive residual income. An article I read recently lists 8 ways to create passive income. A few examples include affiliate marketing, network marketing, royalties, and participating in surveys and paid focus groups. Network Marketing, for example, enjoys huge popularity as a passive income stream. Again, it is just one of the options available to you on a part-time or full-time basis.
Were I still pursuing an active career or in search of an alternative path to my financial future today, network marketing would be my preferred approach because I know what it takes to be successful. Network marketing is not without risks but the low upfront investment combined with upside gains trump the downside risks. Research, performing your due diligence is the key to narrowing your choices of companies to join.
My financial education began at the age of ten when my parents separated – and subsequently divorced. In short order, my mother’s usual parent-to-child communication became largely “don’t waste this”, “take your school clothes off before you go out!”, “stop scuffing your shoes because we can’t afford to replace them,” or, “when that’s gone, there is no more.” The small extras like the occasional Neapolitan ice cream and cookies, a day trip to the beach in Atlantic City, Wildwood, or Cape May (all in New Jersey), or the new shirt and trousers before Easter or Christmas became all too rare. Money, or the lack of it, shaped our daily lives in ways that were new to my three siblings and me.
On a deeply subconscious level, I processed our financial condition so profoundly it affected my attitude and behavior toward money for decades to come.
In the 50s and 60s, the primary purpose of my education, in my mind, was to facilitate access to a good job, ideally, a career, and, ultimately a guaranteed pension to cushion myself against the harshness of life and the daily struggles seniors of that era seemed to experience. My maternal grandparents were the most visible examples for me.
Among my contemporaries, we spoke not of the need for greater financial literacy; rather, a career with the guaranteed capstone of an annuity. That was the extent of our financial literacy. No one I knew or associated with, spoke of royalty or residual income. We did not understand it as it might have applied to ourselves. That category of income, in our minds, was the prerogative of “Hollywood royalty”, some professional athletes, and high-profile artists, musicians, pop-stars, and authors.
Following a successful career as a federal executive in the U.S. Foreign Service, I eased into retirement undergird by the guaranteed pension I strove mightily to earn over three-plus decades.
It was only in retirement through more diverse activities and personal associations that I began to truly understand the power of residual income and the options available to build passive income. I never considered the idea of leveraging my time, energy, skills, and resources over a period of five-to-seven years rather than a working lifetime of 35 – 40 years.
In a more hostile 21st century economic environment where defined benefit plans are considered “high risk” by many companies, employees are well advised to improve their financial literacy and take more direct responsibility for their financial futures. There are elements of at least two generations currently in the workforce (Boomers and Generation Xers) that remain mired in a pre-90s mindset regarding pensions. To them, I would say to consider this: The AARP, citing Bureau of Labor Statistics, reminds us “traditional pensions have been disappearing for years in the private sector, where only 16 percent of workers were covered last year, down from 35 percent in the early 1990s.”
Creating a serious passive residual income as an adjunct to regular income or in lieu of salaried, long-term employment is hard work, in either case. The return, however, on your time and the low level of investment required, could pay off for a lifetime.