Skeletal Plan Towards Financial Freedom Part I – Earning Money

For commoners like me who do not have a strong family background, achieving financial freedom is a very big but still achievable goal. One that requires a lot of time, effort and sacrifice. The process takes place over the span of a few decades. Do not deceive yourself that you will be able to achieve it in a span of a few years, unless you have exceptional skill or luck. But despite the long time and the seemingly long process filled with many details, it generally can be broken down into 4 steps: earning money, saving money, growing your money and lastly persisting in the first 3 steps till you achieve your goal.

Earning money – one of the first things we do when we step out into society. We need to earn money to pay for food, for accommodation as well as for a whole range of basic needs and wants. The level of income you get determines how many products and services you are able to trade it for. These products and services range from houses to cars, from restaurant dinners to fishing trips on a yacht, from a nice looking PC to a high-spec camera etc. The more you earn, the more you are able to have. That is why society decides how much to respect a person based on how much he or she earns.

Income is generally divided into 2 portions, active income and passive income. Many self-proclaimed financial gurus will tell you to aim for passive income. That is not wrong, but not at this stage. At this stage, when you are just starting out, active income is the only way to go. Active income is essentially trading your time and energy for money. In short, going to work. Working for others is the fastest way to get a sum of money, although how much you get depends on your knowledge and skills. An uneducated person doing odd jobs will not earn as much as a doctor working in a hospital. But be it a low or high paying job, get a job within your capabilities first. While doing a business is also a form of active income, I do not recommend it early on as it has risks and you have little or no income from it when you are building its foundations, which can take quite some time. Minimally you should first have a stable job which brings you consistent income, then after that you may consider low risk form of businesses. More will be explained later on.

After securing a job, if your job pays you decent overtime pay, work your ass off for the extra money. Factories are a good example to get overtime pay. I have a friend who was earning $7000 per month 10 years ago in the factory, simply because he clocked all the OT hours he could and worked the night shifts (night shift pays more). If your main job does not pay you overtime, do something at the side. Be it being an Uber driver or a tuition teacher, earn some side income. Of course the ideal is doing something that we like, or something that we do not hate. Some people like driving, hence being an Uber driver may be good. Tuition pays well, so some went along with that. Personally I taught tuition in the past as one of my sidelines.

If you are in a white collar job in which the company does not allow you to work another part-time job openly (in countries like Singapore, this is the case), you may wish to consider the following: Either work in a job which does not need to interact with too many people such as private tuition, start a small online business at the side or do some remote freelancing work. All these are still considered active income, although as mentioned earlier, starting a business may take some time and effort before you start seeing results. That is why it is very important to first get a job which gives you a steady source of income before starting a business.

If you are thinking of starting a business, you may consider dropshipping as a risk-free business model. Note that at this time you are trying to accumulate as much resources (in this case, it is money) as possible, so you should not go for a type of business where a failure would result in heavy losses or even debt, such as opening a physical retail shop. If you are doing freelancing, many would recommend starting with Fiverr or Freelancer to search for jobs although I personally do not really recommend these 2 websites. You may wish to try advertising on specialised forums to offer your services or using your personal network to get some jobs at the side. Even livestreaming or making videos on Youtube can be a source of income. However, do take note that for incomes which require some time to build up such as setting up a business or doing streaming, you will need to persist in some time before you can actually see the rewards coming in. It took me 3 months before I had my first sale at my dropshipping business. That is in addition to the risk in terms of finances and time. While we can keep financial impact to a minimum, do take note that businesses and livestreaming endeavours may not take off as well as you would like. But that should not be a roadblock for you. In aiming for financial freedom, you will have to explore, try, work at it and persist until you find a way out, even if in the end you have to change paths repeatedly and restart the whole process all over again.

Whether you are doing OT or extra jobs, do take note that you need to take care of yourself mentally and physically. This is a marathon, not a 100m sprint. Pacing yourself while taking care of your mental and physical health is very important so that you can sustain in the very long run.

What we can see from the above is that to earn the first pot of gold, you cannot simply be satisfied with the regular hours in the main job. You either extract out as much money as you can from that one job that pays well over time, or you expand your sources of income. There is no right or wrong as to which to choose. Working for someone gives you ‘immediate’ rewards in the form of salary, while working for yourself (business, video streaming) gives you reward at a much later stage if you succeed. Most importantly, be it in the long term or short term, you are working more than the others to get more money than the rest.

Do take note that if one is going for financial freedom, sooner or later you will have to expand your sources of income. One cannot simply depend on that only one job (even though it may be so for the short term) over the long term to reach financial freedom. For one, all of us are easily replaceable. The worker can be changed out, the manager can be retrenched and even the President can be impeached and taken over by others any time. While in the short term (2 to 3 years) we can work over time at a job to earn more money, we should still plan for a backup route. Getting started on your journey towards financial freedom by relying heavily on a well paying job is one thing, but relying solely on that one job to achieve financial freedom is a very risky thing to do.

So far the multiple streams of income mentioned above are all active income. But as we progress we should start to work on passive income, ie using money to grow more money. With passive income, you are earning money even when you are sleeping. Afterall, we only have 24 hours a day and limited energy which will get lesser as we grow older. Having a passive income, or multiple sources of passive income is critical for us in reaching financial freedom. We will come to that in the later part of this article series.

In summary, earning money is the first step towards financial freedom. Work hard at your job, or work hard at multiple jobs for a start. Then work towards expanding more sources of income, such that when one stream of income is cut off, you still have other sources to rely on.

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