We have established that it is up to us to take care of our financial future. We must have enough income to afford saving and investing for the future, so it's important to examine our basic beliefs and principles about income generation.

The concept of freedom essentially comes down to having time and money: the time to do what we want, when we want, with whomever we want and money to pay for it. So our freedom is proportionate how much we control the time and money in our lives.

The way we earn a living is directly related to how happy and fulfilled we are with our life. We all know to seek out we love, though most of us at some point settle for just paying the bills. But it is not just what you do that determines your enjoyment and happiness in your career, it is also how your income is generated.

When we are younger,  we have less personal obligations, so it's easier to find time to work more hours, come early, stay late, work weekends and travel a lot to advance our careers. When we get married, and especially when we have children, the idea of work-life balance becomes more appealing as we would rather spend more time with our loved ones than at work. So if we plan smart we should do most of our income building while we are young.

The concept of freedom essentially comes down to having time and money: the time to do what we want, when we want, with whomever we want and money to pay for it. So our freedom is proportionate how much we control the time and money in our lives. 

There 4 ways to generate income in the US economy. They are described in detail in Robert Kiosaki’s book “Cashflow Quadrant."

1. Employee – no freedom of time or money.

Somebody else, like an employer, decides what to pay you and what hours you must work. Typically, a job pays a position, not a person, so your quality of work does not increase your compensation. Having a job not only puts us at a mercy of an employer, it also puts us in the system with direct conflict of interest in terms of our financial success. The employers goal is to maximize profits, our goals is to maximize wages.

The more we make the less the employer keeps, hence the conflict of interest. Since they are the ones in control, we live in constant fear of salary cuts, downsizing, layoffs, and other cost-cutting strategies that negatively affect our income and quality of life.

If the employer can find someone to do your work for less, they will. As employees, we trade time for money so we have to put in time to get paid. The problem is that no matter what our credentials, experience and education are, each of us has only 24 hours in a day, so we are trading limited commodity. Our income has no potential for exponential increase as we cannot multiply time. There is no hope for freedom before retirement for the employee, and freedom in retirement is only possible if we learn about investing early and maximize investing in employer-offered and individual retirement accounts.

2. Self-employed – limited freedom of time and money.

You are the one deciding what you are worth and what to pay yourself. All income you generate goes to you and you can be flexible in deciding when and how to work. The risk of self-employment is having the work ethic and resilience to learn to generate your own work, like consultants, real estate agents and commission-based sales.

There is no employer handing you the tasks to fulfill, you typically have to find your own clients and make peace with dealing with rejection and managing risk. While self-employed people are self-disciplined and work hard, they enjoy having not having a boss to report to and higher income potential per hour.

The income-limited factor of trading time for money is still present because we are still limited by 24 hours in the day. So the only way for the self-employed to have complete freedom prior to reaching retirement is to either hire other people to do the work and graduate to business ownership or to become a very diligent saver from the start and put away a lot of money and invest early.

3. Business Owner (Employer) – full freedom of time and money.

Business Owners can  hire other people to work for them. They generate their income through profits. Hiring other people is the only way to exponentially increase our income, because if we were to own a restaurant with 10 employees, each of them working 8 hour days, our business would be working 80 hours a day even though that day is still limited to 24 hours. 

Additionally, as a business owner we would be receiving profit based on 80 hours a day, but we do not have to actually be there working. Hence we would have more time and money.

Learning more about entrepreneurship is really the only way for Millennials to have freedom prior to retirement. 

4. Investor – full freedom of time and money.

To enjoy freedom as an investor, we must be financially independent, meaning having enough in our investments (real estate, mutual funds, stocks, bonds, other assets) to generate sufficient income to cover our living expenses. 

Everybody must eventually become an investor in order to retire. That is why calculating our financial independence number (FIN) early on and putting a plan together to invest monthly toward it is such an essential first step.

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