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Residual Income vs Wages

Residual income, also known as passive income, is when you continue to get paid after the work is done. This includes royalties from books, movies, or songs and also income that comes from real estate or business investments where you don’t actually have to be present to earn it. On the other hand, wages fall in the category of active income. Other forms of active income are salaries and the earnings of self-employed service providers such as lawyers, doctors, engineers, etc. Active income comes as a direct result of one’s efforts. It will always be limited because there is a limit to how many hours a human being can work. And if it is to keep coming in, one may as well prepare him/herself to work forever (including at age 90).


Many look at having their own businesses so as to transition from mere wages to residual income. However, I think they simply don’t know what exactly is the difference between the two types of income. Having your own business does not mean you shall benefit from residual income. Rather, having leverage is what guarantees you this passive income. In simpler terms, you need a system that works for you. It is the income you continue to earn after the work is done. Your work is to put in place that system.

Network marketers often find difficulty in understanding the residual income that some of the top leaders in the industry are enjoying. Majority of network marketers join the industry because of the system already in place that is leverage based. Why is it that only a handful enjoy this residual income yet the opportunity shows that each single distributor can profit from it? Is it possible for us all to attain residual income in network marketing? If so, what does it take?


Yes! We can all attain passive income in network marketing. It simply takes the right attitude. Let’s dive more into residual income vs wages. Both of these involve work. Wages demand a continuous exchange of your time. Residual income demands that exchange but for a specific period of time. In other words, passive income demands temporary sacrifice of the things you love most to do or even people you care most about, for a given period of time.

In his book, the Millionaire Mindset, Dexter Yager explains that it is the principle of giving in order to get that will eventually lead you to financial freedom. It is the determination of what you are willing to sacrifice so as to attain your goals. Yager advises that you even write down these things that you are to sacrifice.


Quite often, one must sacrifice today the very thing he is striving to achieve tomorrow. It may be that you are seeking financial freedom in order to spend more time with your family, but find that for the short term, it is necessary to reduce available time in order to reach the goal. Evaluate your time, hobbies, pleasures and habits, and determine what you are willing to sacrifice. In order to obtain the time, you need to give with your family while you attain financial independence, you may need to cut back on television, or golf, or the wasteful luxury of time spent inefficiently.

– Dexter Yager

Why the sacrifice talk? Have you heard of pay now play later or play now and pay later? Earners of wages prefer to play now not knowing they will pay later. The road to passive income begins with focus on the activity; not the results. The road to wages focuses on the results; not the activity. To those working for an active income, it’s important how much is taken home at the end of the month. On the contrary, it doesn’t matter how much is taken home for the person focused on residual income. What matters is how much activity has taken place before they go back home.


Take a look at the examples we gave of those who make passive income. Does the writer focus on how much he’s making while putting the pen to paper? What of a musician as he comes up with a new song? Does the real estate owner focus on how much he’s making when putting up buildings? Their focus was on the activity. They know the results will come much later. It could take several years for them to enjoy the result of the activity. Network marketers often give up because they still have the wages mentality. They want to see how much they are making this week, instead of how much productive activity has gone on in that week.

The activity should be your focus in your early years in network marketing. Becoming the millionaire you want to be is very easy, but not simple. Simply change the way you look at a few things. The focus more on doing what works; not on how much you are making now. You want a passive income? Do now. You shall earn later…

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