Saving money gives you the ability to invest. And investing gives you additional possibilities for earning an income. One of the main purposes of investing is to separate your income from your time.
Investing into assets that provide an income gives you options for how you choose to live your life. If you can earn an income without working, you have the ability to learn new things, enjoy the present moment, or commit yourself to greater things. By creating income sources that are separate from your time inputs, you take greater control of your time and bring your Highest Self within reach.
Welcome to the Investing Series – my thoughts on how creating multiple sources of income gives you control of your time and allows you to Choose Work You Love.
I’ve talked about how to invest previously in the Investing Series. It’s now time to talk about why we need to invest at all.
You Are Your Most Valuable Asset
There’s no denying that for most people, their labour will provide the majority of their lifetime income. Whether it’s a job or a one-person specialised business (like an accountant or consultant), trading time for money is the primary means people earn a living.
If following the path of Financial Independence with a goal of retiring early, eventually investment income may eclipse one’s salary. But for those still on the path (or simply looking to improve their financial situation), salary will almost always be the number one source of income.
Almost everything in our society requires money to engage with it. Unless you were born with a silver spoon in your mouth, working for that money is essential. Therefore, maintaining your ability to earn an income should be your highest priority.
Your physical health must be at a level that allows you to function as a competent worker. You need to be able to attain adequate nutrition from your food. And you also need to ensure that your mental health doesn’t deteriorate through isolation or lack of enjoyment.
Maintaining your health gives you the greatest amount of time necessary to earn the money you need to live.
Part of the money you earn will need to be saved for retirement. If you plan to retire early, that amount will be much higher. Regardless of when you plan to retire, you need to be prepared for the possibility of losing your source of income.
From this, we find a few truths about ourselves, salaries, and the nature of work:
- You must ensure you maintain the ability to earn an income through healthy living & continuous learning (triumph over entropy)
- You must raise your hourly rate faster than inflation erodes its value (triumph over inflation)
- The money you earn must be used wisely to support your current & future self
- You must prepare for the inevitability of being unable to work
None of this is possible if you don’t look after yourself. Your ability to transfer your time and effort into money is a sacred gift that must be protected and refined. And in my opinion, it must be protected long after you longer need to utilise it.
But…
Just because salaries are the number one source of income for most people, doesn’t mean they have to be for you. Nor should working jobs that have no meaning be something that we suffer through.
I believe that building a passive income stream – income that is detached from your time – is mandatory. Building passive income sources (either directly through creation, or via investing) gives you freedom and removes your reliance on your job.
Creating your own income streams increases your self-reliance and takes power away from those who would seek to control you.
Perhaps one day, my passive income will provide an income that exceeds my highest earning years. Until then, I will continue to work part-time by working sustainably in a way that earns me the most money for my time, and invest aggressively into both myself and the market.
Attack & Defence
By separating your income from your time, you gain advantages on multiple fronts. A backup income allows you to be selective about how you engage with traditional work.
Thanks to building passive income sources and keeping my expenses low, I can pursue contracting to make a living. Instead of committing to a single employer in a full-time job, I instead take short-term contracts as a casual worker.
This work is intermittent, with gaps of weeks or months within contracts. But they often have a higher pay rate compared to a permanent position.
Building passive income was directly responsible for allowing me to work in this way. I can weather the downtime between contracts while also earning a high hourly rate.
At the moment, my strategy is to continue working part-time contracts and work on additional sources of income outside of my career. Working part-time prevents me from burning out and keeps my hourly rate high. Additionally, the free time can be used for non-job pursuits, which may also involve earning money.
My strategy allows me to buy my time back, one day at a time, without sacrificing future earning potential or savings rate.
This strategy as written may not be relevant to everyone. However, there’s likely a way you could transform your work-life balance with even 20% of your expenses covered. This alone is reason enough to consider building multiple sources of income.
Work & Meaning
While some traditional jobs are terrible, some offer more than just a pay cheque. They are a great way to learn new skills, meet new people, and contribute to something greater than yourself.
Why talk about the benefits of jobs in an article about separating your income from your time?
Because we’ll all be working for many years, and we need to make sure we don’t burn out along the way.
A lot of people see work as something they have to do for money. That money is then split amongst savings, basic needs, and things that provide meaning.
It’s possible for the work itself to provide meaning directly as well. This is more than just a job making you happy. Work should allow you to grow, feel proud of your accomplishments, and become a better person along the way.
Work must have this type of meaning in order for it to be sustainable. It’s why we had trends like “quiet quitting” and “lying flat” in recent years: people are forced to work in jobs that don’t provide meaning. And it sucks.
The work must be valuable in and of itself in order to offer meaning. Valuable work is therefore that which offers high monetary reward and true meaning.
Instead of doing the work solely for money, the focus is on the work’s meaning. The money is a by-product of that work.
I’ll save the rest of my thoughts on this for my Work Series, but I want to emphasise the importance of good work. A high-quality job is a great way to find meaning. But by slowly replacing your active income with passive income, you can gradually introduce your own forms of meaning into your life.
Work doesn’t go away and it never should. But by separating your income from your time, you gain greater control over what that work is.
Live Like Nobody Else
Separating your income from your time gives you power, security, and freedom. You are building a machine that pays you while you sleep. That money allows you to reduce the amount of time you need to trade your time for money.
You have the power to control how you engage with work (and your need for income). You have the security to not rely on a terrible job to meet your needs. And you have the freedom of time to pursue meaning in your life.
Perhaps you’re investing in assets that pay dividends or through creating a product you can sell at scale. It doesn’t matter what your investments look like (and I won’t tell you what to invest in). The end goal is the same for both – creating leverage and earning an income that is unlinked to the inputs.
The end result is that you get to live a lifestyle that you love.
A lifestyle that you designed, with a sustainable amount of work, passive income, and ample savings.
It’s at this point that your focus can shift towards Choosing Work You Love, and continuing to spiral upwards until you reach your Highest Self.
Closing
Separating your income from your time isn’t just ideal – it’s necessary.
Almost everything we do requires money, and we need to ensure we always have enough.
Building passive income streams helps protect against job loss or other calamities. It allows you to work sustainably and live your ideal lifestyle.
Pursued to its extreme, you replace your salary entirely and move towards your ultimate goal.
A goal that not many of us get to achieve.
Thank you for reading.
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