Making Money vs Earning Money

In this article we take a look at the key difference between the pursuit of Earning money & Making Money. We explore the limitations of earning money, and examine the true meaning of making money.

“Money is a terrible master but an excellent servant.”

– P.T. Barnum

While most people have read this quote, very few understand it. And even fewer understand it in the context of the current soho-economic environment.

Most people hold a limited view of Money – assuming that there is limited money in the world, and so if the rich have a lot, they are taking it from the poor. And this is what keeps them in the competitive loop of continuously earning more & more ‘amounts’ of money.

Secondly – most people still think of currency as Money. Their primary focus is on earning maximum currency. And in that situation employment becomes the de-facto means of earning Money. Such individuals will take up a job that pays higher currency. They move up the employment ladder based on currency.

Selling Labor

What they are effectively doing is selling labor (and the corresponding time). In the current socio-economic environment labor creates Equity. So when you are employed by a corporation, you are effectively selling your share of the equity created for currency. If you do not understand this, you will most likely stay poor for life, irrespective of how much currency you earn. Selling your labor, or your time, is the first way of earning money.

Acquiring Assets

The second option of earning money is by acquiring assets. It offers a simple solution for generating income. It is understood easily by the masses. It offers a stable means of generating income through capital investment. Individuals with high currency earnings can graduate to buying assets & generating income. This requires delaying gratification in order to accumulate assets, and learning asset management in order to manage assets. While this form of generating income offers freedom from employment, you can become a slave to your assets. 

Creating Equity

The third option is creating & managing Equity. This is the least understood option. However it is the most crucial &most rewarding in the current socio-economic environment. If you can create a lifestyle that suits your personal needs and creates surplus incremental equity for your sustenance, you have hit the jackpot.

I cannot overemphasize the importance of creating & managing equity at the personal level. And therefore we will be looking at a discourse on equity & self awareness in the coming articles.

Self Awareness Questions

  • Which category / categories are you in right now?
  • Where do you want to be? How can you get there?