I have a good friend who insists on doing everything himself. Hire help for home repairs and remodeling? Forget about it.
My friend is in car sales so he has every Wednesday off. Everyone in car sales works on Saturdays. Anyway, this buddy of mine has spent his last four Wednesdays off remodeling his master bathroom. I asked him why he didn’t just hire someone. He responded, “That’s not the way I was raised. Besides, I saved some money. I’m not like you where I can afford to hire someone and just go golfing for the day.”
My friend brought back memories of why I decided at an early stage of my professional career to distance myself from labor income. There’s nothing wrong with hard work, but it’s so ingrained in us from an early age that the only way to get ahead was to work long and hard.
Schools and universities are built around the concept of labor-based income. Learn skills in medicine, law, business, engineering and go work for someone else and if you stick with it and climb the career ladder, you’ll make the big bucks one day.
But here are the problems with labor income:
- There’s a ceiling to how much you can make. There are only so many hours in the day.
- What if you get hurt and can’t work anymore?
- One day your labor income will stop.
- You’ll always be trading time for money.
My friend will always be trading time for money. He’s not in a position to hire someone else to do work around the house. He relies on labor income – income from car sales – to sustain his life. And that’s another problem with labor income. Most often, it just sustains life.
Instead of labor income that just sustains life, I prefer the type of income that sustains a lifestyle.
I like to take off with my family when I want and for as long as I want. I don’t want to be constrained by the two to three weeks of vacation time given to me at work. Those in a position to trade money for time don’t rely on labor income. They rely on investment income – passive income that makes money around the clock.
Those who rely on labor income work for their money. Those who can trade money for time have their money work for them.
What am I talking about?
Those who work for their money accumulate assets that only drain their resources – cars, vacations, fancy clothes, etc. Those who have learned to make their money work for them put their money into assets that don’t drain resources but build them.
Productive assets like cash flowing real estate, income-producing businesses, agriculture, and similar assets generate instead of depleting income.
Multiple streams of income from these productive assets can provide you with the things labor income can not:
- Free time.
- Working because you want to and not because you have to.
- Time with family when you want as long as you want.
- Not having to worry where the next paycheck is coming from if you get injured.
- Not having to depend on your employer to make ends meet.
Passive income from investment assets unlocks the lifestyle you’ve always wanted. It provides the security in your life of not having to punch a clock to pay your bills.
It gives you the freedom to stop working for a year, contribute to worthy causes, and offers stress-free living so you have more time to focus on your health and hobbies.
Many have experienced unemployment during the pandemic and have welcomed government stimulus checks with open arms. Wouldn’t you like to never have to worry about losing your job again? Then consider focusing more on investment income than labor income.
Focus less on wage rich and more on becoming asset rich – rich from the types of assets that generate wealth and not take away from it.