What is Residual Income?

In personal finance, residual income is the money you have left over after you’ve paid all your essential expenses and debt payments for the month.

That leftover cash is what you can use for savings, investing, extra debt payments, or fun.

Some people also use “residual income” to describe ongoing income that keeps coming in with little day-to-day effort, like rent from a property or royalties. But day to day, most people feel it as:

“How much money do I actually have left once everything important is paid?”

How KOHO Essential Helps You Grow Residual Income

Residual income gets bigger when your spending is under control and your cash flow is clear.

KOHO Essential is designed to work like a no fee monthly account for most people because:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• Enjoy unlimited transactions & free e-transfers (never worry about sending money to someone again).

Residual Income in Your Monthly Budget

At a simple level:

Residual income = Take-home income – Essential expenses – Minimum debt payments

If that number is small or negative, it means:

• You’re living very close to the edge, or

• You’re relying on credit to fill the gap

If that number is healthy and growing, you have room to:

• Save regularly

• Pay debt down faster

• Handle surprises without panic

Residual income is what turns “I’m just getting by” into “I’m actually moving forward.”

Residual Income as Ongoing Income Streams

Sometimes, residual income is used to mean income that keeps coming in with less daily effort, like:

• Rental income (after expenses)

• Royalties (books, music, digital products)

• Certain types of business or side-hustle revenue

Those streams can boost your monthly residual income on top of your job, making it easier to save, invest, and reach bigger goals.

How to Increase Your Residual Income

You can attack this from both sides:

1. Lower essential costs where possible

   • Renegotiate bills (phone, internet, subscriptions)

   • Cut or downgrade things you don’t really use

2. Reduce high-interest debt over time

   • Focus extra payments on the highest-interest balances

   • Avoid running up new high-interest credit card debt

3. Increase income where you can

   • Overtime, a raise, a promotion, or a side hustle

   • Direct any new income into savings and debt payoff first, not lifestyle upgrades

Every extra dollar you don’t spend or do earn becomes part of your residual income—and that’s what gives you options.