Rich educate their kids the ways of earnings, savings, investment and building assets like business, real estate, stock, bonds, etc. They do not teach them to work for money. They teach how money work for them.
Type of Earnings:
There are 4 ways to earn money:
First two options (1 and 2) which I shared with you will are an active source of income and both are person centric, means you can earn money through these ways only till the time you work or give your time for it. When you stop doing work, your earning also stop, and other two options (3 and 4), both are passive source of income and both are system centric. In initial stage of both ways required very hard work and knowledge but once your system build, then don't need you work always, and even if you stop working, still it generate money for you.
Peoples who depends on active source of income are struggle for entire life. Rich and billionaires are those who increase there passive income by doing or creating their own business or by doing an investment.
Active vs Passive Income:
In the active source of income, your presence is required. Therefore, your income can not be more than an extreme limit. Your hourly income is fixed and you can not work more than a fixed time like 8 - 18 hours (You not able to work more than 24 hours in a day).
But in passive income, you build assets which generate cash flow for you. So, your presence not required and you use that time to build more assets. Business and Investment are greatest assets where you leverage others time and skills.
Investment:
Investment is a biggest weapon to kill Poverty. A great quote by Warren Buffett (number 1 investor of the World)
You should save at least 10 percent of your income and invest it in such place/business/investment instrument (like stock, mutual fund, real estate, etc) which you can earn compounding interest.
Type of Earnings:
There are 4 ways to earn money:
- Doing Job
- Doing something your own, simple way by being a self-employed.
- Creating a Business.
- Doing Investment.
First two options (1 and 2) which I shared with you will are an active source of income and both are person centric, means you can earn money through these ways only till the time you work or give your time for it. When you stop doing work, your earning also stop, and other two options (3 and 4), both are passive source of income and both are system centric. In initial stage of both ways required very hard work and knowledge but once your system build, then don't need you work always, and even if you stop working, still it generate money for you.
Peoples who depends on active source of income are struggle for entire life. Rich and billionaires are those who increase there passive income by doing or creating their own business or by doing an investment.
Active vs Passive Income:
In the active source of income, your presence is required. Therefore, your income can not be more than an extreme limit. Your hourly income is fixed and you can not work more than a fixed time like 8 - 18 hours (You not able to work more than 24 hours in a day).
- e.g. If you 1 hours wage is Rs. 2000 and you work for 10 hours in a day then your one day wage maximum Rs. 20000 (Rs. 2000 x 10 hours).
But in passive income, you build assets which generate cash flow for you. So, your presence not required and you use that time to build more assets. Business and Investment are greatest assets where you leverage others time and skills.
- e.g. 1 person work 10 hours. Therefore same time 100 peoples works 1000 hours (100 people x 10 hours).
Investment:
Investment is a biggest weapon to kill Poverty. A great quote by Warren Buffett (number 1 investor of the World)
"Do not save what is left after spending, but spend what is left after savings."
You should save at least 10 percent of your income and invest it in such place/business/investment instrument (like stock, mutual fund, real estate, etc) which you can earn compounding interest.
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