Tayo Oyedeji, in a series of tweets, shared the difference between making money and growing money. This article highlights the four simple models for making money and growing money.
People get in trouble when they try to make money from a model designed for growing money.
There are two key models for making money:
1. Competence and Skills
People pay a lot of money to hire competent and skilful people. The primary way to make money for most people is by developing complex, marketable skills. You develop some skill(s), find a buyer (employee) and sell your skill(s) + time. Complex skills are more marketable and expensive than mundane skills
For instance, I once charged a fee of $10,000 for less than a full day of work for business operations consulting for a big firm – Operations Management is a relatively rare skill. Do a quick audit of your skillsets. Can they earn you a good income? If not, what additional skillset do you need to build to earn a premium? Most people are lazy: they will not invest the time to build new skills.
In today’s world, technical skills are more expensive than non-technical ones.
My Artificial Intelligence mentor was a music composer who went from $25,000 a year to $150,000 in 12 months.
He still plays music but is now a data scientist at @EpicSoftHosp.
2. Hustle & Flow
Many people are not wired for technical competence. They, however, have natural business skills that can help maximize their income. Others have both. They can hold down a regular job while hustling on the side. I have always done both. I sell competence during the day and hustle at night.
Most employers will not pay you more than you need to live a decent life. To make more money, you will need to build a side gig that will multiply your income.
There are also two key models for growing money:
1. Frugality & Saving
If you make $1m and spend $1m, the money just passed through you. You are not wealthy. You’re just a money conduit. On the flip side, if you make $2,000 a month and keep $500, you just grew your net worth by $6000 a year.
The first way to grow money is by living below your means so that you can save some.
1. Don’t buy crap you don’t need.
2. Sell anything you haven’t used in a year.
3. Don’t impress people with things, impress them with your investments.
2. Investment & Equity
This is actually why I decided to write this. Many people hold a misguided view that investments and other money-growing models are the paths to making money.
Let me debunk that notion:
Investments are for growing money you have already made.
This erroneous notion is why people fixate on dubious/questionable ways to make money – gambling, Ponzi schemes etc. The promise is that you can make a lot of money with a little amount of investment.
The models for making money are skills and competence (employment)/hustle and flow (business). Frugality grows your savings and investments accelerate the growth.
Learn to create value & make money first. You can only grow what you have made. If you try to make money with a money-growing model, you will chase risky propositions and lose money. You can invest in mutual funds, treasury bills, company shares, and other investment opportunities.
The way to make money is by creating value with your skills or business. Then you save some and grow it with investments.
Make it with models for making money and grow it with models for growing money.
Don’t try to switch the two models.
Start growing your money today.
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How can i live frugally with a roommate that spend lavishly
Except for expenses that are sometimes shared (like electricity bills and other utilities), I’d recommend that you keep your expenses as separate as possible. That way, your roommate’s lavish lifestyle does not exactly affect you – except the peer pressure part. In that case, you’d need discipline.
This article was a bit helpful though, at least I read some stories similar to my experience. I’m a 400lvl medical student of unn trying to save money for things I know my parents won’t get for me, But here is the thing, we’re comfortable to an extent financially but I don’t get monthly allowances. They just send me money when ever they feel like could be once in 2 months (usually 40k for 2 months)or once in a month or they just give me cash when I’m going back to school. The bottom line is, considering the state of this country these allowances are barely enough for me to be able to save. And I don’t even eat out anymore. I try to cook or maybe just starve (lol) but either way. I just want to know if there is anyone in this same situation and how you went about it or anyone that could help Map out a plan on how to go about saving plus any suggestions on a job I could take on as a medical student considering how stressful and demanding my course is.
T for Thanks ?