Are you earning money or are you making money? Did you educate yourself on the flow of money? Let’s talk Earning Money vs Making money. Aren’t they the same thing? In my opinion, no – they are not the same thing.
Before I go any further, let me make it very clear – this post is not intended to belittle having a job! I am employed full-time and earn a fairly good income on a monthly basis. The aim is merely to point out the difference AND to open your eyes to the possibility that you could make money (or generate income) on the side, after hours.
Work hard to get a job – earning money
Many people you talk to ended up in a job they don’t necessarily enjoy. Some would say they’d rather be doing something else, but can’t afford to take a loss in income. Others would say they’ve always wanted to be their own boss, but now the prospect of putting in the effort and hours to do it seems to daunting.
One thing I’ve learned in my life is that, even though I received an allowance from my parents as a child, I never learned how money works and how much of a difference there is between earning an income (like receiving a monthly allowance or delivering newspapers) and generating an income (selling goods or delivering a service or creating a system to generate income).
You only need to do a quick search on the internet to see that young graduates are struggling to find work – the reasons for this may be debated, but that is not the focus for this post. The reality I am trying to bring across here is that having a good education no longer ensures that you will get a job. You also need to realise that just because you have qualification, you still need to start at the bottom of the ladder to gain experience in your field of expertise. There is no substitute for good, old-fashioned hard word.
Use your income to start making money
There is no rule that says you HAVE TO SPEND all your hard earned money! What you should be doing is to use some of the money you earn from your job, is to save and invest portions of it. You should optimize your budget so that you spend less than you earn and have cashflow available for generating extra income. Check out these posts I did in the past:
I’d also suggest you check out this video of mine on YouTube: Spend Less than You Earn
If you can develop this discipline from the time you earn your first pay check, you will be sitting pretty by the time you reach retirement. How do you do that? Well, there are MANY ways of saving your money in various financial products like retirement annuities, unit trusts and money market funds which you get from any reputable finance house. Examples are Sanlam, Old Mutual, Allan Grey, Alexander Forbes and host of other companies. Do your homework on what they can offer and find a TRUSTWORTHY broker. Just because they work or promote these products, does not make the person reliable or trustworthy.
You could choose to do your own investments through various platforms like Easy Equities (for example). The investment fees is likely to be lower, but then the research and risk and rewards rests on your own shoulders. So you need to be more careful and familiarise yourself with what you are doing. Fortunately, platforms like these offer demo accounts with fake money in them so you can learn how to do buying and selling of funds and shares (or equity) in companies.
Typically, you can also find tutorial and other educational materials on these platforms as well. As long as there is no conflict of interests and you can truly separate your time at work from the time you invest in a side hustle, there is nothing stopping you from starting a side line business – especially if you can do it online.
Work hard to be your own boss – making money
Being your own boss is also not all it’s cut out to be. If you think that being your own boss is a life of luxury, peace and quiet and expensive holidays – you’ve got a BIG surprise coming your way. It takes a lot of behind the scenes work to run your own company – even more so when you are the only employee. Many small to medium enterprises started out as a one many show. I’ve known some people, who I’ve either worked for, or who are people close to me, who struggle to move from being a one man show, to becoming a manager or director of the company they started.
If you’ve visited my blog or my YouTube channel before, you may have noticed that I refer to Robert Kiyosaki quite a bit. He is the author of a few books – ‘Rich dad, poor dad’ is most likely the most well-known one. Robert Kiyosaki says in this book that his rich dad taught him that the rich don’t work for money. In another book of his called ‘Rich Dad’s Cashflow Quadrant’ he explains that there are four income quadrants, namely (E)mployee, (S)elf-employed, (B)usiness owner or business system and (I)nvestor. See more details in the picture below:
“The rich don’t work for money”
Robert Kiyosaki, author of Rich dad, poor dad
On the path of making money
If you choose to start making money, you need to understand that there will be ups and downs and that you will have to be patient. Typically it takes 2 to 5 years for a business to start making money. This is also discussed in ‘Rich dad, poor dad’. Most business also fail within the first 2 to 5 years – and there are many reasons for that.
One of these reasons is that the business owner is passionate about the product or service the business brings to the market, but doesn’t understand the flow of money. Another reason may be that the logistics of delivering or manufacturing of the product or service is not effective. As a business owner/operator, you also need to promote and advertise your goods or services, and that is a whole other ball game.
Robert Kiyosaki says that you if you are the smartest person in the room, you have a problem. This is why you have partners and employees to do the things you are not an expert on. So you could have an accountant to take care of the flow of money, logistics people to handle to flow of product or personnel (if you have service staff on the road) or production specialists if you manufacture goods in house.
When it comes to finances, you need to at least have an understanding of Income Statements (showing income and expenses of the business), Balance Sheets (Showing the assets and liabilities of your business) Gross Profit (Revenue less Expenses) and know that there are differences between gross profit, operating profit and net profit.
Multiple income streams
Closing off, I’d like to spend a little time on making you aware of the fact that wealthy people typically have, on average, 7 different income streams. It is also important to note that you don’t develop 7 income streams all at the same time! This is done over time as opportunities come your way.
Once again, if you have a job, you are in a great position to manage your personal finances in a way to start using the surplus (spending less than you earn) between you income and your expenses because in most cases, that income is pretty steady and doesn’t vary a lot from one month to the next.
Thank you and be blessed
As always, thank you for visiting my website. I invite you to connect with me on social media (links to the right of this post) and leave a relevant, non-spam comment below. It is incredible how much spam this website attracts! If you have some pointers on how to solve that – please let me know.
Anyways, be blessed…till next time. Cheers!
