Throughout our lives we’re going to need to earn money. And that’s something no school teaches us. In fact, no university teaches us either. Throughout our lives we’re given all kinds of knowledge, and that knowledge is usually of very little use for earning more than average.
It’s true that knowledge and qualifications can help us get a job, which means we’d be earning money the first way, the one used by the vast majority of people. And this way of earning a living can be very dangerous, because if one day it disappears, we’re left with nothing.
The 3 ways you can make money throughout your life
There are no other formulas or strategies. You can only make money through:
1. The first way: trading time for money
We’re talking about working for someone else, which basically means choosing to offer our time in exchange for money. There’s nothing wrong with making a living this way, because empires are really built thanks to a business owner’s ability to find people who join the company and work for them.
If there weren’t people willing to trade their time for money, it would be very hard to sustain the role of the business owner.
Of course, from an investment point of view, this way of earning money is very risky. We teach an investor not to put all their eggs in one basket, because if the investment goes wrong, they’re left with nothing. And that’s what happens with being an employee. We put all our time and future into one job. We take on debt on the assumption that our time will be repaid with a pay cheque over the coming months. We make plans for the future counting on receiving a cheque from our employer.
In other words, we’ve bet everything on this investment. If the company closes tomorrow, there’s a restructuring, or your boss simply decides to fire you, the problems in your life begin and you have to go looking for another place to trade your time for money again.
This is the way of earning money chosen by practically 98% of the population.
2. The second way: investing money to make money
Sounds good. Many of those who trade time for money save so they can move to this way. Only a few, to be honest, because most people don’t manage to save anything since they have no financial plan. In other words, they adjust their standard of living to their income.
However, to earn money this way, you must first have gone through the first way. Basically, we’re talking about using money we have so that it generates more money, whether by investing in the stock market, in property and so on.
3. The third way: multiplying your time to multiply your money
But… how? We all have the same amount of time. This is where, on the one hand, we can use leverage, the main trait of the people who earn the most money. We can use other people’s time, other people’s resources and other people’s contacts. We could also call it creating a scalable model, which basically means being able to increase our income with the same time and effort.
But this way also includes creating different assets so you have several sources of income. And the truth is that today, thanks to the internet, creating assets that generate passive income is easier than ever. That said, we mustn’t forget that the best asset there is, is having your own business.
And this is the way chosen by only the 1% of the entire population, who manage to hold more than 40% of all the money in the world.
See also: 11 rules of personal finance
This group apparently takes on more risk than the first group, and we could even say they put in more time at the beginning, but in the long run it’s a safer way to earn money, especially when you build different income streams or several companies. They are responsible for their situation at all times, and they don’t depend on a third party running the company badly or on being fired.
And without a doubt, when someone asks how you can make money without doing anything, creating assets is one of the answers, but don’t fool yourselves. You have to do a lot and work a lot, because as the saying goes, “to make money while you sleep, you first have to go without sleep for many nights.”
So these are the only ways you can make money throughout your life. And you can choose which way you want to do it, risks included.
See also: 37 small business ideas with low risk and high profits
Featured image: Antti Leppänen, CC BY 4.0, via Wikimedia Commons.
