How to Make Money

"The 4 Keys to Making Money There were four keys we used during those early days that aided us in our quest to make money. If you take the time to remember each one, I believe you'll have a much better prospect of achieving your financial goals than you would by going it alone. These keys are: Never forget that making money consists of one simple formula: Revenue (sales or gross pay) minus cost (expenses) = profit. To make more money, you must either increase your revenue, decrease your expenses, or both. There is no other way. It really is that simple. How you do that involves tradeoffs in terms of time, relationships, and quality of living. Some people try to make money by going to law school and earning a higher salary, even though it means years of study and lots of debt. Others try to make money by starting a successful business. Focus obsessively on controlling your risk. You should never be willing to take on wipe-out risk just for the chance at making money. Don't start speculating with options in the hopes of striking it rich. Don't recklessly borrow money in an attempt to leverage yourself to the hilt and have one big score. Never rely on a single household income to pay all of your bills (I much prefer the Berkshire Hathaway model). Treat your money like an employee. In the past, I've written about a technique I used to help me understand how compounding works when I started studying finance in childhood. I thought of each dollar as a potential employee that could earn more dollars for me if I protected them and put them to work. A decent employee, in my mind, was able to earn at least 10% per year, or 10¢, without using any debt. My job was to collect as many employees as I could, and get them to churn out as much additional money as possible, while still enjoying my life and living according to my morals. At some point, my dollars (workers) would be earning enough for me to live off the ​passive income. Looking back now, it is kind of funny because I don't want to retire -- I'll be one of those guys who is so passionate about his job that he continues to work his entire life. But it is important because I don't have to work; I have a choice."