What Is Linear and Residual Income?

Gone are the days of mid 50's and 60's when a family could survive upon a single income. Today the inflation and economic factors are such that survival on two incomes has become hand to mouth. Going by this trend we can very well imagine what the future holds for us. Two incomes certainly will not be enough. It's best to prepare for the worst and expect the best instead of the opposite. Its best then to have multiple incomes flows into your finances than to have an insecure future. The concept and importance of extra income becomes all the more apparent.

People who have been well-to-do have always known and taken care of this. If one income dries up, one can always fall back upon the other streams of income, and if all go well you can only get richer, no harm in that. Ordinary and average living people have always been in a dilemma regarding this. Loss of one income really affects them adversely and it would take years of hard work before any normalcy returns. Not to mention, the rippling effects of financial distress that could cause a lot of heartburn and unwanted emotional disturbances.

Having diverse sources of income or extra income gives you a backup to fall back upon. If one source vanishes, you should not feel the difference. One should have enough time to reorganize and regroup, that's it, and you are back on the happiness highway, safe and sound. The importance of extra income and extra sources of incomes is not lost on anyone today, therefore the want and rush.

Extra Income can be of two kinds – Linear and Residual.

Linear income is the extra income you earn on an hourly, daily, weekly or monthly basis. There is no more future commitment attached to it from your end or form the receiver's end.

Residual income is an extra income where you work hard once and reap the fruits of it all for many years in the future. The reward for the same effort paid over and over again.

In normal course of a career, any individual earns a linear income through a job or a profession. You are earning only for the time you can spare on work on a daily basis. Some earn a higher linear income. Most smart people try to shift to residual incomes from their linear incomes through extra income routes to have a secure retirement and future. Starting with one residual extra income effort a year would be a good idea.

Internet gives a lot of options in the extra income route. One has to be careful in selecting the right one from them by recognizing the hype form the straight talking ones.

Almost all these programs have residual income components in them. Select one and give it everything you can, when you can earn the residual from it, time to start off with the next one.

 All the best.

If you would like more information on extra income, check out more articles in this blog.

Tom Wallace

Seven Year Cancer Survivor