Making money is a topic of general concern. After we are born, we have no productive capacity, we have to eat, drink, sleep, and be taken care of, and we start to spend money and enter a state of debt.
In the early days, I relied on my parents and family to survive, and I was able to get scholarships and grants at university, but I didn't create value, and I was still borrowing money from society.
After the completion of education, you need to be self-reliant and start earning money.
We spend every day of our lives, but making money is only part of it.
There is a saying that making money is like eating, and spending money is like diarrhea.
It is easy to consume, but to make money, you need to overcome the shortcomings of human nature: extremely poor self-control, short-sightedness, indulgence, extreme fear of risk, greed, etc.
I like to use the metaphor of chasing a bull, building a fence and planting a tree to understand the three ways to make money.
1) Cattle chasing income.
Cattle chasing refers to labor-based income, which is obtained by selling one's own labor. When you stop working, your income is interrupted.
It is the main income model for farmers, small traders, and wage earners. Limited by the non-reproducibility of the labor resources invested by the individual, the ceiling is very low. Annual income of one million is the upper limit. In addition to special reasons such as the rich second generation, ordinary people have to start from a bull-chasing income when they enter the society, and accumulate their first wealth by providing labor time.
The risk is low, which is related to the amount and quality of individual labor, and does not involve the risk at the business level.
2) Fence type income.
Fence revenue refers to product or service revenue, which is earned by providing standardized products or services to the market.
This revenue is characterized by a system that can be built and replicated. 80% of the world's richest people get rich through fence income.
Equity or option income from business owners, company executives, and core employees. Dong Yuhui, who has been hotly discussed in the past two days, has also amplified his influence and sales ability infinitely through self-leverage. His income of tens of millions is also a fence income. Like Warren Buffett, his income is mainly from planting trees.
3) Income from planting tree types:
Tree planting income is a kind of asset-based income, relying on the income from existing assets, including rent, interest, wealth management products, real estate appreciation, ** and debt investment.
There is no need to invest in individual labor to earn income from tree planting, and money will help you earn money and achieve personal time freedom.
Some people are too busy chasing cattle to build fences.
Some people can quickly get through the bull chase stage and start building fences and planting trees.
A good development trend is that with the growth of our personal ability and wisdom, the proportion of cattle chasing income decreases, and the proportion of fence income and tree planting income increases.
In this way, wealth is passively increasing, and the time invested in accumulating wealth is decreasing, so we can have more free time to do what we like.