The Money Fountain
*This is a transcript of a speech for our local Toastmasters Club. Because it received such a great response, I thought you might like to read it as well. It also served as the impetus for a podcast episode*
When I was growing up I heard, more than once, the phrase, Money doesn’t grow on trees or there is also, What do you think I am, made of money? It was firmly implanted in me and I am sure many of you that if you wanted money you had to go to work and earn it. There was simply no way around it. Unless, you were a magically gifted and talented person who somehow became rich and no longer needed to worry about money. You are either wealthy, or you have to trade your time for money, 40 hrs a week, 50 weeks a year… just like everyone else.
It seems like a pretty simple, and widely accepted concept. How many people in this room have a j.o.b.? There is absolutely nothing wrong with that. Every single one of you is a great contributor to our community in what you do to earn that money every single month. And for many of us, that is enough.
It just simply wasn’t for me.
Over time, I found my way into a concept called residual income. You know, what movie stars and insurance agents make, right? Now money has become something for me that flows in and out of my life much like water, although, sometimes it burns a hole in my pocket. So, rather than trade hours for dollars, when I need to adjust my income, I simply make changes in the pressure of the water or money flowing in, much like opening up the faucet. I like to think of it as a money fountain.
So what exactly is Residual income? Residual income is money that continues to flow in after the initial work is done. As I mentioned, actors earn residuals, as do authors, insurance agents, landlords, songwriters, app developers and others. Let’s take actors as an example. They put in the work, read the script, show up on set, recite the lines, attend the premier and done. Residuals start flowing in. Now, if they want to ensure a good flow, they’ll promote that movie in interviews, they’ll hire a pr firm, they’ll diet and exercise and hire a coach to keep them looking good, all to keep people’s interest in what they have already created. They adjust the amount of effort based on how successful they want that movie to be and for how long. If they fall ill or get in an accident and need to hibernate for a week, a month or a year, the income does not immediately dry up. They will still eat and pay their rent because of residuals. They have created that peace of mind.
Now what happens if someone in this room or a family member becomes seriously ill or injured for a month or more? What if for some reason you cannot control, you cannot work? If you are trading time for money, hopefully you have a great disability policy, a nest egg or a successful GoFundMe event. Most of us have put some plans into place so that we don’t become part of the bankruptcy statistic. So that’s good. I’m not trying to scare you.
But what if, you decide to develop a money fountain for yourself? Here’s what that could look like. I want to tell you about a colleague of mine, T for short. T built up a nice residual income over the course of a few years that sustained her and her family nicely. She had a handsome husband, two lovely teenagers, a lucrative business. Unfortunately, one day T’s husband decided it wasn’t working for him and he left the marriage. She was blind-sided and totally distraught and depressed. She didn’t work in her business for about two years. She moved across the country, started a new life and eventually came back to herself and her business. Then she met a man, they fell in love fast and within about 8 months, they married. Unfortunately, right about the time they got married her new husband was diagnosed with a fast moving cancer. She immediately dropped everything and put her all into his care, his appointments, his every need. Within a few months, he was gone. And then she grieved. All tolled, T did not work on her business for about 3 years. Fortunately, during that time, she received income every month of about $18,000, because her customers had kept shopping, every single month. She did not have to worry about juggling a j.o.b. On top of everything else that life was sending her way. Now that’s peace of mind.
It’s been about 6 months and T is back to work, opening up the tap on her money fountain. And I’m really happy for her and all the positive she is putting into the world right now.
Now, let’s look at if a money fountain or two or three might be helpful in your life.
Here are a few things you might consider: rental properties, both short and long term, audiobook narrations, create and sell art, direct sales or network marketing. A trend right now that you might also consider is writing and marketing online courses or creating apps if you have a niche that you’d like to educate on.
There is also the stock market and interest on your nest egg. To earn $5,000/month, you would need roughly $3 million in the bank at a 2% APR. Most folks don't have that. If you do, good for you!
In the end, your best bet is to find a couple avenues that resonate for you. Look for a track record of long-term returns (consumer goods), a high loyalty rate among consumers, something that is scalable (residual, not passive), low barrier to entry and can be accomplished in the amount of time you can commit. I’ve found that most people can come up with 5 hours per week.
Once you understand residual income, why it might be helpful to you and you’ve found what floats your boat, the next step is to commit to it.
Money doesn’t grow on trees but it can flow like water, make sure you direct it your way.