What Are Your Options?

First, you need to consider whether you want to generate supplemental income or enough to replace your current career, perhaps to even exceed it. You also need to think about how you want to earn that income. Are you satisfied with trading time for money or do you need a better way to generate income?

There are three main types of income:

(1) Linear – This is where you trade time for money. Most employees do this; they work 40, 50, 60 hours a week for either a set amount per hour or a set amount per week. Even doctors and lawyers work for linear income, since their earnings are determined by hours logged.

Many people are comfortable with this type of income because it’s so common, but it has a serious downfall. If you don’t work, you don’t get paid. So, you don’t have much of an ability to create serious income unless you’re willing to devote most of your time to your work – forever.

(2) Residual – This income is like a royalty situation where you do the work once and then get paid for that work time and again. Book authors, song writers, patent holders and insurance salespeople are good examples of people earning residual income.

In my opinion, this is a better form of income since it’s not tied solely to time served; however, it can be tough to find businesses that offer this type of income or offer high enough payments to sustain a desirable lifestyle.

(3) Leveraged – This income is generated based on your efforts combined with the efforts of others. For example, company owners and executives are paid off their efforts and those of their employees. The direct-selling industry is full of good examples of people who are paid on their efforts and on the efforts of individuals they've helped train.

The beauty of leveraged income is that it doesn't stop when you go on vacation, get sick or even retire, in some cases. Most truly wealthy folks understand the value of leveraged income. Billionaire John Paul Getty once said, “I’d rather earn 1/100th of the efforts of 100 others, than from 100% of my own efforts.”

So once you've decided how much income (meaning supplemental or full replacement) you want to generate and how you want to generate it (which type of income, as described above), it’s time to consider some options that will enable you to do so.