What are the different ways people earn money?
To understand how people earn money, we first need to look at what money is. We can consider it a representation of value or a convenient tool for bartering. It could also be viewed as a representation of an individual’s time and effort.
The four ways people earn money :
- 1. Getting a job
- 2. Turning your knowledge into money
- 3. Starting your own business
- 4. Investing your wealth
The old saying is time is money and money, and it couldn’t be more true. Keeping in mind that money comes in many different currencies and forms, we will use this information to better our understanding of the ways people go about earning money in modern society. Let’s hop straight into the first one and learn how we can start making money efficiently.
Getting a job
By far the simplest way is to get a job… This may seem obvious, but remains the most direct way of exchanging your time for money. You work for someone else and they pay you an hourly wage or a salary in order to fulfill a task or service for their business.
While this is the most simple and direct way to earn money. When you look into it, you realize that it comes with a few serious flaws. The first is that your time is consumed, while the second is your earning potential is limited by the number of hours you are able to trade for wealth. For some, this alone solves their problems, and find themselves quite happy with this exchange, however for those of us that want to get ahead and live an amazing life. This will likely not be enough, meaning that we would have to consider our other options if we really wish to succeed.
Pros
- Immediate short-term rewards
- Repeatable
- Creates stability
Cons
- Time is consumed
- Earnings Ceiling
- When you stop working, you stop earning
It is not always the most glamorous, but if you invest in the right skills and apply yourself, it is possible to make a very successful living off a normal career.
Turn your knowledge into money
If working for somebody is the simplest way to earn money, monetizing your information is the most efficient. Every single one of us is privy to a unique perspective, with our set of knowledge and skills.
By taking the existing knowledge and skills we have accumulated and turning it into something that can be considered valuable to others.
This can be split into two sections, the first is where you are self-employed and still directly trading your time for money, this could be a music teacher offering lessons, a lawyer providing legal counsel, or an accountant consulting on your tax returns.
The second would be doing something like starting an online store or building a blog. Where you build something that will create more passive forms of long-term income. Inevitably these still have a large element of work involved, but solve the big problem of detaching you from the 9 am to 5 pm routine that traps so many people.
The real win here is to break the cycle where Money=Time
Pros
- Higer rewards than working for another person
- More freedom
- Creates passive income
- Higher earning ceiling
- Relatively cheap
Cons
- Time-intensive start-up process
- Start-up costs involved
- Steep learning curve
- Still partially subject to Time=Money
If you are already more established you could consider learning how to trade crypto, or how to day-trade
Your ability to detach your time from your earnings is the key to long-term success and earning money the easy way!
Start your own business
We have already covered turning your knowledge into profit. Now we will further explore how this can be applied to creating your own business platform. When you think about it:
All businesses are structured around products or services that solve problems for other people.
By starting a business what you are actually doing is taking a problem that people have, and solving it in a step-by-step manner, which adds value to their lives, the value that you are able to get rewarded for.
How much that reward is, depends on the scale of problems your business is solving, but the real reward is the detachment from Time you get by employing other people and applying the right business tools.
Pros
- High earning ceiling
- Free up your time
- Adds value to others
- Tax benefits
Cons
- High start up cost
- Can be complex
- High learning curve
- A lot of Trial and error
A business is an infrastructure you create to solve problems for other people. It could be as simple as a gardening or dog walking service to the complexity levels of multinational companies such as amazon. Even governments are structured around the same rules that businesses are subject to.
An important thing to remember about starting a business with more employees is that you also create value for them in their lives, by creating the opportunity for them to improve their own circumstances!
We have entire sections structured around building your business and growing your wealth that you should definitely check out if you are serious about creating an amazing life!
Investing your wealth and using money to earn money
We are finally at the final way of our you can earn money as an individual, which is investing.
By investing in a business and having the right key players run and manage it for you, you are under no obligation to be an expert in that field. The principle carries over to investing in stocks and commodity markets or cryptocurrencies. Which is something we highly recommend you learn how to do early on in life you can start by having a look at the wealth generation section of this blog.
The ultimate form of earning money and almost completely detaching your earning potential from the time you need to spend on it.
Pros
- Unlimited earning potential
- Detached from time
- Multiple earnings
- Least effort
Cons
- High start up cost
- High learning curve
- A lot of Trial and error
- Volatile
- High-Risk
Time is more valuable than money, you can always earn more money, but you cannot make up for the time you’ve lost.
Still, it helps to invest your money wisely too! Be sure to learn the basic investment fundamentals as well as how not to lose all your money in crypto, then visit our library section where you can check out our top recommended reads on business and finance. These will help you learn and apply the right strategies to understand markers, diversify your portfolio as well as spread and manage your risk!
You now have enough of an understanding to set some good goals and get cracking on elevating yourself to a level where you are able to determine your own schedule and interests without having to sacrifice more time than you’re willing to!
TLAT is reader-supported, when you buy through the links on our site, we may earn an affiliate commission. Learn More
