We all have the same 24 hours in a day but isn’t it interesting how certain people are able to create massive success and wealth while others end up having an average and normal life. So how we make more money?
Now, without counting those who grew up wealthy or we’re lucky to inherit or win the lottery, we have to admit that there have been many people who came from nothing and built massive levels of success and wealth with those same 24 hours a day.
So today, we are looking at how the rich leverage their time and are able to make more money by working less.
Now, when I say working less I don’t mean that these people don’t work hard to build their wealth, on the contrary, they work incredibly hard, especially at the beginning of their journey to create the life they have now.
What I mean is how to use their time to accomplish more in less time than the average person
How to use their 24 hours compared to 99% of the population and how they build their wealth over time. So eventually they don’t have to work if they don’t want to. The first thing and something that is becoming increasingly important when it comes to getting started on your journey to wealth is understanding the difference between absolute income and relative income
Absolute income focuses only on the absolute number of dollars earned.
Relative income focuses on time location mobility and even the lifestyle of the individual.
For example, let’s say that my friend Tom makes $100,000 a year and Jerry makes $80,000 a year.
In absolute income, Tom is richer than Jerry because absolute income only focuses on the dollar amount but let’s dive a little further what if Tom has to work 80 hours a week in order to make his $100,000 while Jerry only has to work 30 hours per week to make his 80,000. this means that Tom makes $26 per hour while Jerry makes over $55 per hour of his work.
In income relative to time, Jerry is richer.
Now, let’s go even deeper, Tom has to stay in New York City which is a fairly expensive city to live in because his job is there.
Jerry, on the other hand, can live anywhere he wants while Tom has to pay $6,000 per month just for living expenses in New York City Jerry spends $2,500 a month to live in a nice place in beautiful Thailand.
This means that Jerry ends up with more money at the end of the month than Tom does.
Even though Tom makes more money than Jerry, he ends up with less money less time and less freedom than Jerry does.
Leveraging not only your time but your skills to increase your time value will give you a better opportunity to build wealth since it can provide you with more time, freedom and money
Focus on developing a skill
A great way to make more money is to focus on developing skills that are valuable to the marketplace.
Weather is learning how to build, Market, sell to audiences online, managing automation systems or learning copywriting.
Building those high-dollar skills where you can charge much more money than any normal job can pay you will be able to learn more in less time (I recommend you develop an online skill like Facebook ads or SEO).
You can use websites like Skillshare to learn and develop the skill you want to focus on.
scalability and automation
The reason why building high-dollar skills are important is that it allows you to build a strong income that gives you freedom of time.
This allows you to focus on scalability or building other additional sources of income.
A little secret that virtually all wealthy people follow to make more impact with their time is to focus their time not tasks but on scalability.
In other words, they are bored being the bottleneck of their business.
For example, let’s say you have a hot dog stand. You go and buy the ingredients, you make the food and you sell the food and you have a pretty successful small business.
You sell out every time and you have so much demand that some people don’t even get to enjoy your delicious hot dogs.
Since you do everything, you are the bottleneck of your business. Nothing else will get done unless you take time to do it.
But what if you hire employees to take care of these tasks? You have somebody who cooks, somebody who takes care of the customer and get a service that will deliver ingredients in case you start running out.
All of a sudden you have a system of business that no longer needs you.
You are no longer the bottleneck of the business and now you can open up as many hot dog stands as you want as long as they are profitable.
You are able to make a higher impact, serve more people, and make more money in the process because you focused on scalability instead of just tasks.
Think about McDonald’s and many of these fast food restaurants. These businesses have systems in place where they are able to hire almost anyone to take care of the tests while the high-level Executives focus on high-value work like marketing and advertising.
This is why most CEOs and Company owners make much more money than the average worker even when they work fewer hours than their employees.
In a way, they fire themselves from The Lure value position to focus on the higher value work.
A good idea to begin focusing on high-value work is to use the 80/20 principle to learn which 20% of your to-do list is going to provide 80% of your results.
This is a very powerful strategy if you don’t know what tasks you should focus on.
Money management and make more money
The second part of building massive wealth is understanding the financial patterns of the average person versus The wealthy.
Learning what assets and liabilities are, will allow you to make better decisions with your money.
If you’re not familiar with these terms, assets are things that put money in your pocket; liabilities take money out of your pocket.
For example, Tom, like everyone else has an income and has expenses and he has a little bit of extra money at the end of the month.
So he uses it to go out to the movies every week and buys himself a nicer car which is a liability because it takes money out of his bank account every month. so Tom ends up with little to no money at the end of the month.
On the other hand, Jerry makes the same amount of money as Tom but instead of spending his extra cash on going out and getting a nicer car he saves his money to buy a real estate property so he can rent it out to other people.
Now, this asset produces more income for Jerry every single month. Jerry now has a higher income.
Jerry uses the extra income to save and invest in more properties which continue to increase Jerry’s income.
In a few years, Tom will stay in the same place just with a few nice toys while Jerry has created multiple streams of income feeding his pocket.
The difference between the average person even if they have a good income and the wealthy is that the rich use their money and extra time to build assets that create recurring cash flow completely independent of what they do, in other words, these assets produce passive income
As Warren Buffett once said “if you don’t learn how to make money while you sleep, you will work until you die”
The conclusion to make more money
So first we must focus on relative income to increase the dollar value of our time to make more money in fewer hours worked.
Then, we focus on not becoming the bottleneck of this business so it can work without us.
Then, we invest this money and extra time in assets that creates continuous cash flow independent of what you do. This way no matter what you do you will still have strong sources of income.