If you have a job, how many hours you work determines how much you get paid. Whether you’re a salaried employee or not, if you cut your hours in half, your pay will get cut in half too.
Even if you’re a high-paid professional such as a doctor or lawyer, how much you work determines your compensation.
Even if you own a business, but its growth and success depend on you, there’s still a strong connection, though weaker, between your time and your wealth potential.
It’s time to break the tight connection between time and money.
Here’s a six-step process:
- Start a business
- Create great products
- Don’t waste money
- Build processes and develop leaders to run your business
- Hire what you’re best at
- Invest your earnings in more assets
First, start a business. Almost all of the richest people in the world own businesses of one kind or another. You can’t work enough hours to build billions of dollars in wealth if you’re paid by the hour. If we want to separate our earnings from our time, owning a business is the best way.
I’m biased toward ecommerce and software businesses because that’s what I own (see my list of companies here). But almost any kind of business that you can eventually get other people to run for you works.
Second, create great products. You can make money in the short-term by selling terrible products or services. The problem is eventually people find out and stop buying. You get bad reviews, you don’t get any referrals, and it gets harder and harder to get new customers. Instead, sell great products that get better every year and your business becomes a golden goose that keeps laying golden eggs long into the future.
Third, don’t waste money. This applies to your business and to your personal finances. The less money you waste, the more money you have to invest. The more you invest, the more money you have working for you regardless of how much time you put in. Scrutinize every expense and hold each to a high standard of performance. My motto with expenses is, when in doubt, cut it out. (You can always add back an expense later – trust me, they’ll take your money.)
Fourth, build processes and develop leaders to run your business. In the beginning, you have to do everything in your business. Some business owners never escape that trap. Instead, starting now, begin to build processes and develop people within your business to take over the day-to-day operations. Get your team and processes to run marketing, take care of customers, create products, and pay bills. Until all this is taken care of without any issues, there’s work to be done so you can be free.
Fifth, hire what you’re best at. There are areas of operating your business you will (or already do) think only you can do. That’s not true. Someone out there can learn to do what you do as well or better. None of us are that special. Hiring people to do repetitive or low-skill work will save you an hour or two per day at most. Hiring people to do the big heavy-lifting tasks (for me it was marketing and copywriting) will save you eight hours or more per day. That’s freedom.
Sixth, invest your earnings in more assets. Once you build a cash-producing business, invest the earnings into more assets. I’m partial to S&P 500 index funds, but more businesses and other reasonable investments can work too. The more you invest, the more you have money working for you day-and-night while you do whatever you want.
Using the six steps above, you can permanently stop trading time for money. I haven’t had to work since I was 25 years old. I choose to because I love building businesses and helping others achieve financial freedom. I followed this same process and you can too.