Before money was invented, people traded through the barter system, exchanged goods and services with one another for what they needed. This proved cumbersome until money was invented, using objects like shells, precious metals and eventually, paper. Today, money can even be virtual – they are nothing more than numbers on your computer screen or phone. Money can come in any form, provided the parties using it agree on its value.
Money can be earned in many ways and there are two types of income.
Active income is money earned by trading time and effort in exchange for money. You have to work to earn that income, and how much you earn depends on how many hours you can put in and the value of that effort. A CEO earns more per hour than, say, a janitor in the same company. The world, in general, is trained to earn active income. The education system is designed to produce drone workers. From young we are trained to go to school on time, learn a skill and do as we’re told; we take recess breaks; and we get homework. When we become adults, we go to work on time, do our work as we’re told; we take lunch and tea breaks; and we bring work home.
Passive income is income that is earned independently of your time and effort. This is how the rich get rich – and richer. They tap into the efforts of other people’s time and effort, and other people’s money to make them more money. They are business owners and investors. Mind you, self-employed people – doctors, lawyers, professionals who own their practices or firms – generally own a job, not a business. They still work, even if it’s for themselves.
Understanding the difference between Active and Passive income is key to unlocking financial freedom and wealth. It is extremely difficult and rare for anyone to achieve one or both under the employ of another. It is easier to marry someone rich or inherit a lot of wealth (as if that is easy!). Far more people get rich by becoming investors and business owners in the true sense of the word, and by constantly learning and adapting.
This requires breaking out of the employee mindset, formed by decades of mental conditioning. The Rut to Riches board game is an exciting interactive game that challenges the way you think about money. It stimulates the financial outcomes of decisions you make in life, giving you insights and experience, without having to live through it in real-time.
“Do not depend on the enemy not coming, but depend on our readiness against him. Do not depend on the enemy not attacking, but depend on our position that cannot be attacked.”
Sun Tzu, The Art Of War
