Make Money vs. Earn Money

 Four Ways to Make Money or Earn It

As he pointed out so ably in his "Rich Dad" series of books, which I heartily recommend by the way, Robert Kiyosaki explains that there are only four ways to acquire money legitimately:

1. Work as an employee in someone else's business, holding a job that someone else owns,


2. Work as an employee in your own business, holding a job that you own,


3. Own a business in which you get to spend the profits – even if you don't work in that business, or


4. Be an investor, putting your money to work for you.

Let's examine these four alternatives briefly.

 Work As An Employee In Someone Else's Business

In this setting you can expect:

• To get paid whether you contribute to the success of the business or not (not my idea of how to make money),
   
• To have your life regulated by the owner's decisions. She will tell you what to do, where and when to do it, when you can take time off, how much you are to be paid, and what lifestyle you can afford. She may also tell you what to wear, when to take potty breaks, and myriad other details that will affect your life.
   
• Not to know the condition of the business nor to take part in the crucial decisions affecting its current or future operations, and
   
• You can also reasonably expect that sooner or later the job will end – possibly without warning. You may get fired, or laid off. The owner may sell the business to someone who merely wants the company's assets – or the company may fail financially and go belly up.

Most people who take this route wind up dead or broke by the time they reach retirement age. So the long term outlook is bleak, while the interim experience is largely out of your control. To my eyes this choice doesn't look particularly "easy" – which is why I have been self-employed for many years.

 Work As A Professional

Professionals are folks who own their own jobs – doctors, lawyers, dentists, veterinarians, accountants, etc. are often in this category.  The advantages are pretty obvious:

• The pay is good,
• You may be able to earn enough money to invest some - and actually make money thereby,
• You can set your own hours,
• You may be in control of your job – but…

There are also disadvantages:

• Most professions are becoming ever more regulated by government,
• Complying with government regulations is time-consuming and expensive,
• Big businesses, such as hospitals and insurance companies, are buying up control of the professions, thereby turning them into the first category above, whereby they get to make money – and the biggest disadvantage is
• You are still trading time for dollars – and you only have so much time to trade! Is this how to make money?

 Own A Business

In the two categories above you trade time (work) for dollars – thereby limiting how much you can earn. It is this that distinguishes earning money from making money. If you owned enough shares of stock, in General Electric say, you could live on your dividends. You would not have to show up for work or punch a time clock to get paid. This is an important distinction if you want to achieve any real degree of financial independence.

As a successful business owner, unless you spend all of your income on a frivolous lifestyle, you will have surplus income – which will give you the means to become an investor – letting your money do the work of making more money. So this is the logical starting point for acquiring "easy money".

Is this strategy really easy? No. It takes a lot of effort on your part. Still, it's a lot easier than working forty hours or more a week, trading time for dollars for forty years, and ending up broke – and trying thereafter to live on a fraction of the money that barely supported you while you were working

 Be An Investor

Successful business owners inevitably find themselves with a money problem – too much money. They have to decide what to do with the surplus each month. If you just make money and leave it in your checking account, it loses value through inflation – so wisdom dictates that you invest – put it to work for you.

There are quite a few really good investment opportunities at any given time. For a really good discussion of how to become a successful investor I suggest you read Robert Kiyosaki's book, Rich Dad's Guide to Investing. It's the best introductory book I know on the subject. And I've read quite a few.

Without meaning to be presumptuous, I am supposing that you would not be reading the material on this site if you were financially ready to become a professional investor. If I am mistaken, I apologize. But if I am correct in this assumption, then the option of being an investor is closed to you for the time being – and you are left with the three previous choices above.

If you aspire to become an investor eventually – or if you just want to be in charge of your life and your financial future – the only real choice is to own a business. So this is the strategy of choice for you if you want a more satisfying and prosperous life. It will also give you a lot more opportunities to exercise your creativity and to be happy while you are doing it.

Of course the choice of this strategy still leaves a lot of unanswered questions. So let's next take up the choice between an online business and a traditional offline business as a vehicle to make money