3) An insurance agent sells you an auto policy. Each time you renew the policy (every year) the insurance agent gets paid a commission just as he or she did when they originally sold you the policy.

Most people are not familiar with earning income this way because that is not how they are paid. The vast majority of people are accustomed to linear income which simply means they trade hours for money. When you work you get paid, but once you stop working the income also stops. This is not true with residual income because it is not tied to hours worked.

Here are two important things to know about residual income:

First, it takes time to build. I always say it's like watching grass grow or watching paint dry. Although it may take a few years to build, once you get it going it keeps coming. That's the beauty of it - It Just Keeps Coming!

Second, if you were to pass away, it doesn't cease to exist or stop. The income is then paid to your heirs. Think in terms of Elvis Presley or Michael Jackson. Although they have both passed on, their estates (heirs) will continue to receive the income from their efforts forever.

When you earn residual income, it gives you options. Since your income is not tied to the hours you work, you have time to do the things that are important to you. You can spend your days the way you want to.