Understanding the Equation: Time and Skills

Time remains unchanged. Each of us is granted the same 24 hours daily. Skills, in contrast, vary significantly. A skill comprises both knowledge and the capability to address challenges. Simply having knowledge does not equate to possessing a skill—unless you work as an educator.

To earn money, you must apply your knowledge effectively to achieve tangible outcomes. If you fail to do so, individuals have no reason to pay you, often dismissing your efforts. The more you can assist others, the greater your earning potential becomes. The worth of your time theoretically increases with the magnitude of problems you can resolve. However, this journey involves stages.

# Entry-Level: Earnings Tied to Time

As a newcomer in the workforce, your skill set may be limited, leaving you to negotiate with your primary asset—your time. As you enhance your skills, education, and experience, the value of your time escalates. Think of the analogy of a dentist: extracting a tooth may take only a few minutes but commands a hefty fee. Conversely, low-skilled jobs typically offer minimal hourly pay.

Thus, acquiring and enhancing skills that others find valuable is essential for increasing the worth of your time.

# Earnings Based on Time Have Limitations

When your pay is tied to your time, your earning potential is often capped. However, the value assigned to a particular skill or service can change through effective positioning. For instance, a "cook" may earn minimum wage at a fast-food restaurant but could charge significantly more as a "personal chef," despite having similar skills. This difference arises because one is perceived as a luxury service, thus attracting clients willing to pay more.

Client demographics significantly influence your earning ceiling when income is linked to time.

# Intermediate Level: Income Decoupled from Time

The next step in this financial equation involves engaging in work that is not directly tied to your hours. This includes avenues such as:

• Affiliate marketing
• Content creation (with revenue sharing)
• Selling digital or physical goods

Many shy away from this level due to the lack of guaranteed income. They are correct; there are no assurances beyond earning through time spent. This stage requires a certain skill set, along with the confidence (or perhaps naivety) to invest your time without guaranteed returns initially. Yet, persistence can lead to significant rewards, as you start recognizing patterns, analyzing data, establishing systems, building audiences, and diversifying income streams.

Currently, a significant portion of my income stems from this model. I aspire to avoid hourly work in the future—not out of disdain for it, but because I realize I will never be adequately compensated while operating at that level.

# Advanced Level: Building Assets

After generating income through your time and skills, the next critical step is to convert your earnings into income-generating assets to achieve true time freedom. The equation becomes: (Time x Skills = $) ? Assets = Time Freedom. Without this transition, you risk remaining on the "work treadmill," perpetually needing to earn more to combat inflation and lifestyle inflation.

I frequently hear financial experts assert that wealth cannot be attained merely through savings, and I can personally attest to this. Despite increasing my income and savings yearly, I still struggle to advance due to the rising costs of living.

Once you create an asset, it begins to work for you. For instance, publishing a new book on Amazon or uploading a video to YouTube generates ongoing income with minimal subsequent time investment. However, I consider these to be more at the intermediate level.