Net Disposable Income and Residual Income. What’s the difference?

Investopedia defines Disposable Income as:

The amount of money that households have available for spending and saving after income taxes have been accounted for. Disposable personal income is often monitored as one of the many key economic indicators used to gauge the overall state of the economy.
So your disposable income is the amount of money you have on your paycheck. I have a question for you. Does your take home pay (disposable income) cover everything you need to pay for? Things like food, housing, entertainment, clothing? Do you need more money?

How much money are you generating that can be added to your disposable income? How much money are you making with your residual income?

What? Residual income? What is residual income?

Well, Residual income (also called passive, or recurring income) is income that continues to be generated after the initial effort has been expended. Compare this to what most people focus on earning: linear income, which is “one-shot” compensation or payment in the form of a fee, wage, commission or salary.

In his article titled What is Residual Income and Why Do You Want it? Craig Dewe says that Residual income comes from building an asset that continues to pay you after the work has been done. What about building your own fortune?

As Jim Rohn was famous for saying:

“I’m working full-time on my job and part time on my fortune. But it won’t be long before I’m working full-time on my fortune. Can you imagine what my life will look like?

Thank you,



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