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What Is Residual Income?

Residual income is the amount of money left after all financial obligations have been met in a month. For individuals these financial obligations include rent or mortgage payments, loan payments, taxes, and other inflexible costs. For companies or businesses, these obligations may also include rent, salaries, and other operating costs. The residual income is then the money that can be used for other purposes the individual or business deems necessary.

Another term for residual income is passive income. When used in this sense, residual income is used to refer to income that is a result of activities wherein the individual or company does not actively participate in. For example, if you own a row of apartment houses for rent on top of your day job, then the rent that comes in every month is part of your residual income.
Revenue from web sites or blogs is also considered as residual income. However way you make money off your sites, this money falls under this category. Dividends and interest that come from investments fall under the passive income category as well. Indeed, even pensions and royalties from books, music, and the like can be considered residual income.

It is thus easy to see that residual income is a desirable kind of income as it does not take a lot of extra effort - if any, actually - to make this money. In fact, these days, people are looking for more ways to make passive income to ensure their financial security for the future.

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