Linear Income vs. Residual Income

Linear Income vs. Residual Income

When I just started this wealth building journey back in 2008, instructor from first building seminar said:

 

“I will live a few years like you won’t, then I will live the rest of my life like you can’t”

 

I was just starting out and I did not fully grasp what he meant in the beginning.  As I go into the process of financial freedom, what he meant became very clear…

 

You probably may not understand the relationship with picture and title of this blog especially those who just started out.  Well, you will find out why…

 

income-vs-work-years

Most employees, from janitor to company president, have linear income.   Linear income is income from the job.  It can be salary or hourly depending on the position.  It will always do this:

 

Go to work > Get paid > Go to work > Get paid > Go to work > Get paid > Go to work > Get paid

 

On the other hands, building residual income stream will take time.  In the beginning, we need to invest time (Possibly money too) to start the business up.  In fact, most people start the business from negative because he or she needs to invest their money into the venture.

 

Even after that, entrepreneurs sacrifice their time to build up the business from day in day out, while others (receiving linear income for living) are enjoying their life with friends during weekend…

 

It looks like they just work hard and it seems that nothing is happening at all…  So diagram of early stage of business is something like this:

 

Go to work > Go to work > Go to work > training > Go to work > disappointment > Seminar > Go to work > Go to work > Go to work > get paid (Small)

 

Some people may ask is it worth it?

 

I remember the story about bamboo.  For first few years, bamboo is not going to grow even if people put the water to nurture it.  It seems that nothing is happening for that bamboo. However, those bamboo’s root is surely growing strong.  In the end, bamboo grows explosive growth and grow exponentially higher only after 4 – 5 years of nurturing…

 

Building residual income is like taking care of the bamboo.  It will take few years of hard work and sacrifice to grow your residual income.  However, their effort and persistence surely compounds until reaching the tipping point.  Once reaching the tipping point, business income and residual income from the business increase exponentially.

 

Not only that…

 

If you do it right, your residual income will keep pay you long after you stop working.  So diagram will be something like this:

 

Go to work > Get paid > Get paid (Big) > Get paid > Get paid (Super big) > Get paid > Get paid > Get paid > Get paid > Get paid > Get paid > Get paid

 

I have seen so many people receiving this kind of income and it really gives you a total freedom.

 

I am also beneficiary of the residual income.  Without the business with residual income, I probably had to stay in Japanese company forever to just receive linear income.  Residual income from business really got me out of the job that I hate.  Only thing I did is to work hard and sacrifice my life for few years to build business that generates residual income for me.

 

If someone ask me if it is worth it?  I would answer,

 

Absolutely…

About Takeshi Yashima

My name is Takeshi. I am entrepreneur in financial education field to help clients / business associates to achieve financial independence.

Takeshi Yashima's Formulfaforprosperity Blog
Email: takeshi@formulaforprosperity.com
Tel: 847-736-6744

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By | 2016-08-31T00:58:03+00:00 August 31st, 2016|Blog|