Stop Exchanging Time For Money

Mostpeople exchange their time for money. Their entire compensationpackage is determined by the number of hours that they work in agiven week. Typically, an hourly wage is set which is multiplied bythe total hours worked during that time period. The standard in thiscountry is 40 hours with overtime accumulated after that. One'scomplete paycheck is contingent upon them showing up for work. Missa day of work and there is no pay earned without sick time.

Anothercommon pay plan is a salaried position. This is similar to thehourly except the pay rate is the same each week regardless of thenumber of hours worked. Overtime is usually not available in thisscenario. Unfortunately, most people end up working more that thenormal 40 hours under this plan. Companies put so much pressureon employees to increase production that the time spent working seemsto lengthen with each passing year.

Thisis the common mindset that is instilled in all of us growing up. Weare taught the we are to do well in school to get into a goodcollege. Once there, high achievement is stressed so that we can geta good job with a decent salary. When we accomplish that, thepressure is to work hard so that we can advance to higher rankswithin the organization with an associated increase in pay. Finally,we can retire after a productive career and drift off into our goldenyears.

Unfortunately,in this era, this concept is not realistic. Although the educationalsystem still prepares us to get a job, the lifetime employment withthe same company is bygone. People typically work for numerouscompanies during their careers. Massive layoffs are well documented. Loyalty either from the company or the employee is almostnon-existent. Oftentimes, people are caught in financial hardshipdue to unexpected changes in circumstances.

Howdoes one get ahead? It almost impossible to attain financialabundance when exchanging time for money. The reason is simple. There just is not enough hours in a week to work to make itprofitable long term. Eventually, there is a cap on one's earningpotential due to the time limitation. Couple this with the fact thattaxes take a greater percentage the more that is earned and onequickly realizes that it is a fruitless proposition.

Thekey is in the concept of passive income. Basically, passive incomeis money acquired without you “directly” working for it. It isincome that is not an exchange for time. If work is required, it isdone one time with the money flowing in multiple times.

Thereare two forms of passive income: income derived from business andincome derived from investments. Business income is the money thatone receives without actually needing to work in the business. Oneacquires a business that is either run by someone else or is selfsufficient. The profits generated are taken out by the owner thusyielding passive income.

Incomederived from investments is making money from money. Instead of youworking for money, it is putting your money to work for you. depending upon the investment, a rate of return is realized whichgenerates passive income. Examples of this are dividends fromstocks, appreciation in real estate, interest on savings, etc...

Thewonderful aspect of this type of income is that the money is createdregardless of one's efforts. If you don't show up for work, theincome still exists. You will earn the same while at work as youwould sitting on the beach. In addition, this allows one to increasetheir overall efforts. If your money is working while you arefocusing on something else, you are, in effect, paid twice for yourtime. It is easy to see how it is possible to create massive wealthunder this scenario.

Focusyour attention on creating passive streams of income. It holds thekey to all financial freedom.

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