Have you ever wondered about a residual check meaning? Well, you should. If you are interested in making money even when you are not working anymore, you should be familiar with residual payments and the kind of investments or activities that can give you that.
Residual Check: Meaning
A residual check is a check for monies you earn after you stop working or are no longer selling products or services actively. The checks will keep on coming, provided that said products and services keep on making money or based on what your contract says. In some quarters, residual payments are known as royalties.
Read More: How to Get Royalties Checks
Examples of Residual Payments
Typically, residual payments are found within the publishing, insurance and entertainment industries. And they are offered when you fulfill pre-determined requirements. Below are examples of these kinds of payments and how they occur in reality.
1. Insurance Payments
If you sell insurance products worth over a specified amount, you may get additional payments beyond what you already earned as a lump sum commission. The residual payments are a form of bonus in that case and are meant to reward you for the clients you bring in. And they continue over the life of the policy you manage to sell the first time.
The more times the policy is renewed, the more residual payments the insurance company will pay out to the agent.
Read More: What Is Comprehensive Medical Insurance?
2. Acting Payments
If you act on a show that runs for a few years and then ends, you could still get paid if the show is distributed via DVD or streaming services or syndicated on TV. The more successful the show, the more money actors get paid. Also, those who act as main characters tend to get paid the most.
For example, the main cast of "Friends" and "Seinfeld" still make money to this day. And it is usually in the millions.
3. Writing Payments
When you publish a book or an online course, you only have to create the product once. But you will continue to make money long after you first sell it. And periodically, you will get residual payments for additional sales even when you do nothing to market it.
The British author J.K. Rowling is an excellent example of someone who still gets very good residual payments from the sale of the Harry Potter books and movies. Between 2019 and 2020, she made $60 million from the continued sale of her bestsellers and Universal Studio’s Wizarding World, which is based on her stories.
4. Songwriting Payments
Songwriters can make a lot of money from writing and selling their songs. Every time the song is sung, or a different version is made, the music writer will likely get paid a share of the money made. One hit song could bring in a lifetime of residual payments even if the songwriter who wrote it never manages to create another successful song.
Some of the most successful songwriters of all time include Lionel Richie and Diane Warren.
5. Patent Payments
If you are an inventor and own patents for amazing things, you can license out your inventions for residual payments. The company that makes, uses and sells your invention will give you a share of their profits for as long as they hold your patent rights license. How much you make will largely depend on your contract and the demand for your invention.
Charles Darrow is a good example of a famous patent holder. Credited with inventing Monopoly, he became history’s first millionaire game designer due to the residual payments he received from the sale of the game.
If you create or take part in something that eventually becomes a hit, expect residual checks for the foreseeable future. And if you are lucky, you may end up receiving residual payments for your entire life. The payments may even end up being enjoyed by your beneficiaries, long after you are gone.
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- Forbes: #28 J.K. Rowling
- Billboard: These 18 Songwriters Have Written More No. 1 Hits by Themselves Than Any Other Songwriters in Hot 100 History
- Find Law: How to Profit From Your Patent
- Loc.Gov: The Game of Monopoly is Patented
I hold a BS in Computer Science and have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.