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Working For Your Money

by Dave Pratt

When I was a kid if I asked my parents for money they would usually come up with some extra chores for me to do or suggest that I see if one of our neighbors needed some help with something. The lesson I learned is the lesson that most of us learn growing up: You have to work to make money. By extension, to make more money means that you have to do more work. This becomes a very limiting paradigm because you can only work so hard, and there are only so many hours in a day.

Of course, the paradigm isn’t true…at least not completely. There are plenty of jobs we do that don’t make money and even cost us money, especially if they keep us from doing other, more important work.

In his best-selling book Cash Flow Quadrant, Robert Kiyosaki challenges our assumptions about making money, explaining that working for money is just one approach. Kiyosaki explains that there are actually four ways to make money:

1. Be an Employee. This is the traditional approach where you trade your time and labor for a pay check.

2. Be Self-Employed. Kiyosaki says that when you are self-employed you don’t own a business, you own a job, and you work for a lunatic.

3. Be a Business Owner. The business owner hires the employee to work and takes the profit. They may also work in the business as an employee, drawing a paycheck, but if they leave for an extended period the business will continue working without them.

4. Be an Investor. The investor provides the capital to fund other people’s businesses in exchange for a return.

Kiyosaki writes that employees and the self-employed work for their money. If you are a business owner or investor your money works for you.

This is more than theory. In 2001, my wife Kathy and I purchased Ranch Management Consultants. We worked our tails off. We did everything from answering phones to managing the database to planning and delivering programs to managing accounts payable and accounts receivable. Like a lot of people in family businesses we were the chief cook and bottle washer. Add that to the pressure of taking on more debt than we’d ever had and making time for our young family and our stress was palpable. About a year after buying RMC a friend asked how it was going. I remember confiding to him, “At least I bought myself a job.”

In the class room I taught people about the difference between owning a job and owning a business, but I hadn’t applied it to myself. It was just a theory. That night, as I lay awake thinking of all of the things on my crowded to-do list, it was no longer just a theory.

Over the next few years Kathy and I assembled a team of reliable, competent staff and awesome teachers and facilitators. With our team, we developed and documented procedures and processes for producing the results we needed to transform RMC into a real business.

I still struggle with my “work to make money” paradigm. I find it seductive to bury myself in $10/hour jobs. I excel at those jobs and they give me a lot of satisfaction. Yet I know from personal experience that owning your job is a dead end. And while working for a lunatic in the short term has its advantages (no one holds you accountable), in the long term it is extremely stressful. The financial and personal rewards are much greater when you own a business, not just a job.

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