Residual income is a calculation determining how much discretionary money an individual can spend after paying their bills and meeting their financial obligations. To continuously have that residual income without putting in a lot of time, it should be a subset of passive income.
Most of us confuse between high income and high net wealth. Where one is carrying a bucket till back breaks, the other is building a pipeline. The concept of pipeline questions the endurance of bucket income. Any time based method of income generation comes under the bucket carrying category, may it be a job of any variety or businesses that will take up your time, even more as it grows. The question you need to ask yourself is, if I stop doing what I am doing, where will I stand? Will I struggle to put food on my table let alone having surplus?
Fancy Bucket is still a Bucket
When people try to generate residual income by the bucket method, they soon understand that carrying just one, will not be sufficient. They start upgrading their bucket, additionally, take up side projects and ask their partners to do the same. Undoubtedly it creates residual income but at what cost and for how long? You will eventually burn out yourself which leads to stress and stress leads to friction in relationships and sense of unfulfillment. The idea of coming out of survival mode goes out of the window.
Whether you are in business, or you work for someone else, if you sell your time for money, then you are effectively carrying a bucket. No matter how fancy your bucket is, big your bucket is or how many buckets you are carrying, when you stop, it stops being filled.
I remember saying to my mentor, “If I had more money, I would have a better plan.”. He quickly responded, “I would suggest that if you had a better plan, you would have more money.”. You see, it’s not the amount that counts; it’s the plan that counts. – Jim Rohn