Building a steady, reliable residual income stream is an important step in gaining, or regaining in many cases, financial stability. Having a steady residual income stream is a great way to back up your current financial plan, earn some extra money, or contribute towards your retirement future.

The economy these days is not the most stable one and it’s important to have a financial cushion, something to fall back on in case you lose your job, your avenue becomes less marketable, the company closes--whatever unforeseen circumstances that could possibly cause your financial stability to waiver are things that having a residual income stream can guard against. Residual income is income that comes in on a steady basis due to a one time thing that you did, such as creating a website.

Passive Residual Income Stream

There are a few different types of residual income streams you can generate. Passive residual income is generated as a result of little or no direct involvement in the actual creation or production of the money. In essence, passive residual income is income that you may have stirred up, but it’s still coming in whether you work or not. With income such as this, you are your own boss, you set your own hours and the hours that you do put in are not directly involved in the amount of revenue that you create.

Active Residual Income Stream

Active residual income is income that you would participate more directly in creating, like sales. Although the initial effort to create the income has already been expended, you would still be active in the creation of the funds. Resolving customer issues, taking care of finances, making sure product is always in stock or available, researching money saving methods. This is the type of thing that you have to actually participate in to make money. This does not necessarily mean that the number of hours you put in directly correlate to how much money is made, but it does mean that this type of residual income is not money that is going to be made while you sit on your duff and think about it.

Another type of residual income stream is that which is directly involved in retail. It is possible for owning a business to qualify as residual income. If you hire a manager that you trust to cover things for you while you are away, and you only have to check in on things and make ‘executive decisions’ you have just generated a residual income stream for yourself!

Having a second job is not always easy, and it’s not always possible. At times, we all may have family issues, issues at work, and every body needs a little time to play and not worry about how much money they are losing while they are doing it. Who doesn’t want to take a nice vacation every few years? Generate a reliable source of residual income for yourself before its too late--you won’t be sorry you did it.