I’m excited to kick off our new series on “Making Money”! Throughout this series, we’ll tackle various aspects of increasing your income and exploring effective strategies to achieve financial success.
You might be thinking about questions like:
- “What classes should I take in college?”
- “Is college even necessary?”
- “How do I land a job?”
- “What’s the best way to write a cover letter or resume?”
- “What other methods can I use to make money?”
These are questions I’ve pondered myself, and chances are, you have too. We’ll address all these queries and more!
Why Discuss Making Money?
Some people may scoff at the mere idea of focusing on income enhancement. They often proclaim, “That’s not what you should single out!” I understand the sentiment; making money for its own sake isn’t how I define a fulfilling life.
As I’ve discussed in previous letters, I emphasize saving and investing, which are crucial skills for achieving financial peace and stability. However, many individuals are genuinely struggling to make ends meet—that’s when the emphasis shifts to generating additional income.
If you can’t save another dollar, then it’s time to focus on increasing your earnings!
Understanding How to Make Money
Before we delve deeper into this topic, it’s essential to agree on a core principle regarding money-making. I want to establish a clear perspective that will guide us in future discussions and clarify that we won’t be discussing “get-rich-quick” schemes.
The Principle: To make money, you need to provide value to others in a way that they are willing to pay for it.
This simple premise encapsulates the essence of income generation. It’s important to note that simply offering services to more people doesn’t guarantee financial success.
The Beauty of Capitalism
Capitalism thrives on the principle that the more you wish to earn, the more value you must deliver.
However, with increased service comes increased responsibility. Phil Libin, founder of Evernote, articulates this perfectly:
“People envision themselves as the CEO of their own company, overseeing everything. But in reality, everyone else—employees, customers, partners, and the media—becomes your boss. You suddenly have many more people to consider and account for.”
Absolutely, Phil has achieved great wealth, but he has also had to serve a vast number of people.
Two Ways to Make Money
In the upcoming letters, I’ll categorize the various methods of making money into two broad categories: salaried work and nonsalaried work.
Salaried Work
This is the most prevalent method for generating income. In this model, you work for someone else and receive a predictable paycheck.
The predictability comes from the fact that productivity is often difficult to measure in conventional roles. Any fluctuations in your individual performance might not impact your salary on a monthly basis.
Nassim Nicholas Taleb refers to this style of earning as “Mediocristan.” As a refresher, he describes Mediocristan as a space where situations are predictable—where no single event can transform your life dramatically. In this scenario, individuals typically serve one employer, which tends to be less stressful than the alternative.
Nonsalaried Work
In contrast, nonsalaried work is less common and often referred to as a “side hustle” or “entrepreneurship.” This approach can lead to unpredictable earnings, which can vary drastically month to month.
Taleb classifies this money-making method as “Extremistan,” a place characterized by volatility and unpredictability. Here, individual effort can significantly correlate with financial return.
Why Choose This Path?
The defining advantage of entrepreneurship is that your income potential is directly tied to your output. When you provide something people want and start selling it, your earnings can increase as your sales rise.
Consequently, how much you earn is constrained only by your ability to market what you offer. However, remember that starting a business purely for monetary gain is not advisable; it requires hard work and can disrupt your personal life. We’ll dive deeper into these realities in upcoming discussions.
Closing Thoughts
Today, we launched our “Making Money” series! We explored:
- The importance of discussing income generation.
- The foundational principle of making money through serving others.
- The two primary avenues for income: salaried work and nonsalaried work.
I look forward to exploring this journey with you in the next letter!
See you soon, and take care!
Let me know if you need any additional changes or further assistance!