Struggling Financially?

The rules of work have changed.

Most likely you’re working for money, meaning you’re selling your time in exchange for money.

This is called earned income.

To better illustrate this, earned income is like a farmer working with his hands.

His production efficiency ratio is 1:1 = ZERO leverage

It’s extremely difficult to achieve financial freedom with earned income.

1. Earned income is the most heavily taxed source of income.
2. Earned income pays taxes BEFORE expenses.
3. Most probably your expenses are not allowing you to invest any money to accumulate wealth.

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To increase your income, you need to use some kind of leverage.

The better the leverage, the more effective your hours of work will be.

Back to the farmer example:

With the use of a tool (leverage) the farmer above can produce 5X times more ‘value’ during the same hours of work.

Now, the farmer is using not only a tool, but also the power of animals (increased leverage) to boost production.

This farmer can now produce 500X times more ‘value’ during the same working hours.

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To answer your question ‘What’s the best advice you can give to someone who is always struggling financially?’

This advice is for employees: Stop chasing money and start chasing value.

Reevaluate your work and daily actions. Think how you could deliver more ‘value’ through your hours of work. This can be achieved by leveraging some skill, knowledge or tools.

When we’re focused on making money, we are focused on ourselves which blinds us to the value we deliver to our customers or our employer.

Remember this:

We all get paid according to the ‘value’ we deliver, NOT according to the number of hours we work. While we can work the same number of hours, the value delivered by a rocket scientist is dramatically different than a taxi driver’s work.

In the labor market, it all comes to scarcity.

Millions of people can drive a car. Few have the knowledge and skills of a rocket scientist. Increased delivered value leads to higher income, which should ease your financial struggles.

  

-Hector Quintanilla