Wealth, Freedom and How to Create Cash Flow for Life
It’s practically universal to want to increase your income. Regardless of how much money someone has, they would still like to make more.
If you’re like most, you swap your time for money. Even highly paid, successful doctors and lawyers are limited because they have to trade their time in exchange for payment. Doctors can only see so many patients in a week. We call this linear income where you get paid one time for work performed. With linear or earned income, your potential income is limited by time.
Alternatively, we define financial freedom as “Residual Income exceeding expenses.” Residual income is income that continues to be generated after an initial investment of time, money, and effort. In other words, it comes from assets that you build or create one time, and then you keep getting paid from those assets whether you’re physically doing work or not.
You may spend some time initially, while you’re getting it all set up. However, once it’s up and running, you’ll continue to receive income for a long time to come.
A few examples of passive income include:
Dividends, pensions, or interest from investments
Earnings from a business that doesn’t require your involvement (affiliates and silent partnerships)
Royalties or cash from an artistic creation (a book or song you wrote, or even a painting)
Imagine the power of building a few residual income streams that will provide you with reliable profits for the next ten years, or even longer.
Residual income is one of the greatest ways to create wealth. You can create an unlimited amount of extra money in this way.
When your residual income is greater than your expenses, you no longer have to work if you don’t want to. You are free to spend your time the way you want to because your assets pay for your expenses, rather than you having to show up to work every day to get paid.