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There is a clear difference between “earning” money and “making” money. Most times, the words are used interchangeably, although they do not mean the same thing. However, knowing the difference will help you understand how to achieve financial independence.
How You Make Money;
Making money means using your time to create a product or service that continues to make money for you. It’s not dependent on exchanging more of your time for money. Making money allows you to be independent, not dependent on another person controlling your wealth potential on regularly. You can make money by creating a product that people need.
For Instance,
- You write a book and get paid every time it sells, sometimes for the rest of your life.
- You compose a jingle for a commercial where you get paid every time it plays.
- By creating a new or improved product the market needs and wants which you can sell over and over again.
- By investing in stocks, blog or other investments that produces dividends pay out to you regularly
Making money can also come from licensing your creative work or dividends from a business that generates revenues.
How You Earn Money;
Earning money requires exchanging your time and skills for money. You’re paid based on the number of hours worked. It makes you dependent on an individual, organization or a company to earn your living. You earn money when you trade your time and energy for money, That is, you only get paid for every hour, day, week or month you work.
Another great way to make money is by using other people’s time, energy and money to make you money. This could also be referred to as Leverage. Leverage is when you use credit or money borrowed from an individual or financial institution to make a purchase or investment that makes you money.
Using other people’s time, energy and money to make money could be done in different creative legit ways. For example, you can secure profitable real estate deals with real estate firms and then work with an investor who doesn’t have the knowledge or time to find the good deals but does have the money for the down payment. Another good example is by engaging in Joint ventures where you create partnership with an inventor to market his/her inventions or vice versa.
Learning how to make money can improve your finances in ways that saving money simply cannot. There are only so many ways to save, but there are an unlimited number of ways to earn extra money. However, if you want to get ahead financially and create wealth, you need to learn to spend less than you earn, save money where you can, supplement your income and diversify your investments.
