Wait, wait, wait — you’re telling me you only earn money while you’re AT work?
Complete this sentence:
“Go to school, study hard, get good grades, so you can…”
If you answered “get a good job,” you listened well while you were growing up. However, this timeless “wisdom” that our elders bestowed upon us is horribly flawed.
A typical job is actually one of the worst ways to earn good money.
Trading Your Time for Money is Not Optimal
A job requires you to trade your time for money.
There’s nothing technically wrong with trading your time for money; it’s simply an inefficient way to make a living.
When you have a typical job, there are only two ways through which you can increase your income:
1. Work more hours. Unfortunately, there’s a physical limit to how many hours you can work in a week.
2. Get a raise. You could get the occasional raise, but your boss is limited in how much he or she is willing to pay you.
In short, your income potential is limited.
What is Optimized Income?
Wouldn’t it be great if you could make money 24 hours a day no matter what you’re doing? You could be playing a game of golf, sleeping, eating, watching TV, and earning money while you do it.
Millions of people are doing this every day, and you can too. It’s called passive income, and it’s the key to optimizing your income and creating financial freedom.
When your income isn’t tied to how many hours you work or how much you make per hour, you are unlimited. You can set up as many income streams as you want.
Here are only a few simple examples of passive income:
1. Authors: Authors earn money every time one of their books sells. They write the book once, and they earn money on it over and over again.
2. Businesses Owners: Business owners can automate their business or hire someone else to run it for them. In this way, they don’t need to be actively involved in order for their company to make them money. Think of a McDonald’s restaurant. The owner doesn’t need to be there to run the place, his staff runs it for him. Meanwhile, he’s still collecting cash. Alternatively, if you have an online business, you can be making money once it’s up and running or by using advertising and affiliate links.
3. Landlords: Landlords buy up real estate and rent out space for a monthly fee. They can free up their time if they hire a property manager to take care of the property for them. The rental income will continue to come in, but it won’t require any of the owner’s time to earn it.
4. Investors: Investors put their money to work for them. When they invest, they expect their money to grow. With time and compounding interest on their side, smart investors can become very wealthy.
5. Musicians: Musicians earn money every time one of their albums sells or one of their songs is played on the radio. They write and produce the song once, and they keep making money on it over and over again.
If you’ve got some money stashed away, consider using it to start optimizing your income. Purchase real estate and rent it out, start a business, or invest.
If you don’t have the money on hand to get started, use “sweat equity” instead. It is possible to build a business with minimal investment. Many online businesses or service businesses, like yard maintenance or cleaning, can be started part time with little to no money up front.
Once you have your income stream up and running, hire someone else to take care of it for you. Enjoy the freedom of earning an income without having to give up your time for it.
That is how you optimize your income.
Do some online research or read books on how to make passive income and find out what might interest you. Then grab the bull by the horns and put it into practice. Get out of the rat race so you can actually enjoy a round of golf or an extended vacation or that new BMW, or simply watch TV while your money’s accumulating. You’ll never get wealthy working for someone else: take your income—and your goals—into your own hands.
Colin VanderMeulen is the founder and author of the blog Practical Self Help, where you can learn how to empower yourself and live the life you’ve imagined.