My cable company sent me a coupon in the mail worth $100 if I referred a family member or a friend to their company.  I really liked the service my cable company provided.  I talked to one of my friends and she called the company using the number on my coupon when she had them hook her up with cable. I called the company to ask about my $100 and they said they would credit my account for $100.  Not really what they had said they would do, but still I got $100 worth of free cable. 

In the case of Network Marketing companies they basically give you a referral fee, in real money not product, when you refer a new member to their company.  But they do so much more than my cable company did.  They also pay me a commission on all future orders placed by that member. As if that is not enough, I also get rewarded monetarily for all the orders of all the people that my original member refers to the company. 

The money that I receive for today’s referral is a commission.  The money that I receive for that referral’s future orders is my passive income- I am no longer having to work for that income.

Commissions based on a referral’s future orders is a small percentage… can’t really make a living out of it.  But if you use whatever money you receive wisely, well you can make it work for you. When I started making $50 in my networking business per month, I paid my mortgage company an extra $50 monthly.  When I made $100 monthly, than I increased my mortgage payment by $100…than by $200. In a small amount of time I was able to bring my principal on my mortgage way down and my equity went way up.  So I moved into a much bigger house and was able to afford a very high down payment.
The amount of residual income that you can receive from a networking company can be quite substantial depending on how much effort and time you will want to put into your business.  What really works to your advantage is exponential growth.