The first chapter, the second lecture, "There are only four ways to get wealth. Which one are you? 》

Understand the essence of wealth and achieve a free life.

Hello, I am a doer. Welcome back to the course of financial freedom. Last class, we introduced that the focus of financial freedom is the word freedom, which gives us the right to choose our own lifestyle, and it is also the first principle that must be remembered to realize financial freedom. It is summarized as a formula: passive income is greater than total expenditure. In this lesson, let's analyze your existing income methods and see if your way of making money can make you realize financial freedom.

In this world, there are many ways to make money, such as going to work, being a singer, starting a company, making investments and so on. But if we analyze these ways carefully, we can divide them into four quadrants.

The first quadrant is called the employee quadrant, and 60% of the people are in the first quadrant. Employees earn money by working for the company. No matter where you work, whether you are a financial or administrative person, the CEO or security guard of the company belongs to the employee type as long as they are paid by the month. Statistics show that people in China work an average of 46 hours a week, which is more than 2,200 hours a year. In these 2200 hours, you have been helping your boss create wealth, and the return ratio is 1:0.5. Part of the wealth and value you create is given to the company, and the other part is used as salary income. The representative figure of this quadrant is Zhuge Liang in The Romance of the Three Kingdoms. Zhuge Liang, his son and grandson worked hard for Liu Bei's family for generations to save the land of Shu Han. Finally, Liu Chan sold his ancestral business, which was the first employee quadrant.

The second quadrant: the freelance quadrant, where 20% people are in the freelance quadrant. Freelancers work for themselves, often on the one hand, they have deep professional accumulation and earn income through their professional skills. Such as private doctors, auditors, singers, painters, athletes and so on. Their return ratio is 1: 1, which means I earn as much as I earn. The representative figure is China basketball player Yao Ming. He is very talented and diligent. He became a star and went to the NBA to make money, making money every time he played.

The third quadrant is the entrepreneur quadrant. Can you cook better noodles than Master Kong's instant noodles? If you say yes, let me ask you another question. Can you sell your noodles all over China? Many people can make better noodles than Master Kong, but only Master Kong has a system to provide instant noodles in China. Imagine that there are countless good ideas, products and services in this world, but only a few people know how to build a system. 10% of people are in the entrepreneur quadrant. Entrepreneurs have a system that works for them. He only needs to hire the right person to operate the system, and the system will automatically make money for him. This is the difference between freelancers and entrepreneurs. In fact, there is only one question. If you travel for a year, will your career remain the same? Entrepreneurs will still have a steady stream of income during their travel.

The fourth quadrant: the investor quadrant. There are 10% people in the investor quadrant. Investors don't have to work. They invest in a system and money is working for them. To enter the investor quadrant, two conditions must be met: one is to have investable funds, and the other is to be able to operate these funds.

Then let's compare and analyze these four different channels of making money.

The characteristics of the quadrant of employees and freelancers, whether you work for others or yourself, as long as you are in the first quadrant and the second quadrant, your income is active income, also called labor income. Once the labor is terminated, whether you are sick in bed or retired at home, your income will stop. Young people aged 20 to 35, most of their income comes from labor income. The essence of work is to exchange time and physical strength for wealth. At present, some enterprises can only take one day off a week under the 996 working system. This is a problem for left-behind children in many cities. Both parents have no time to take care of their children, so they can only leave them to grandparents. Flowers have a reopening day, and there are no fewer people. Once you are over 35 years old, you are likely to face the fate of career elimination.

The characteristics of the quadrant for entrepreneurs and investors are the third and fourth quadrants. They have non-labor income, which is passive income. This kind of income can be obtained without continuous labor. The most typical passive income is rent income. Landlords don't have to invest a lot of time and energy, but the rent will keep coming in. Some brothers and sisters have three houses for rent, and they don't have to go to work, so they can live comfortably on the income from rent. Or you own shares in a company and get dividends every year, or the wealth management products you invest in have wealth management benefits every month. This kind of income is called passive income. The survey shows that 80% of the rich people in the world have at least three different sources of income, all of which are passive income, and most of the income of middle-aged people over 35 should come from passive income.

Employees and freelancers have limited time and energy, so the wealth they earn is definitely limited. Entrepreneurs and investors quadrant because they have established a profitable system or invested in a profitable system, many people and a lot of money work for them day and night, and their wealth is increasing. The final result is that 80% of the people in the world hold 20% of the wealth, and 20% of the minority hold 80% of the wealth.

Your partner can calculate your own income from these four quadrants, calculate your own financial freedom, and divide your passive income by the total expenditure. For a simple example, if your annual passive total income is 6,543,800 yuan for investment and financial management, then your annual total expenditure is 6,543,800 yuan. 10/ 18=55% is your financial freedom.

When the degree of freedom is between 0% and 50%, it shows that your financial structure is mainly active income, and you still use the way of exchanging time and physical strength for wealth. It also objectively reflects that your life is hard, and unexpected situations and uncertain factors have a great impact on your life. For example, a friend asks you to do business together and wants to invest 500 thousand yuan. You are also very optimistic about this opportunity, but do you have the courage to do it? Doing it means no income for at least one year. Family members eat, children go to school, and the elderly see a doctor. They expect the money you can get back every month. In other words, no matter what risks or opportunities you face, you may have no choice in the end.

When the degree of freedom is between 50%- 100%, it means that passive income has become your main source, and you have initially achieved financial freedom. At this time, your life will be relatively easier, you don't have to rush about for life every day, you can spend more time with your relatives and friends, and you can take a long vacation and travel occasionally.

When the degree of freedom is greater than 100%, you have achieved financial freedom, you can do things according to your own ideas and really choose the life you want. What needs attention is to maintain the existing foundation and further expand the length of your financial freedom.

Doing the job of financial management has brought me into contact with many rich people. They occasionally fail to invest, but it does not affect their wealth to continue to grow. I have met many poor people, too. They have never lost a dime, but their lives are getting tighter every year. The reason why many people struggle for money is not material poverty, but ideological poverty. They don't lack good education and stable jobs, but they don't know that to achieve financial freedom, they must build their own pipelines.

In this lecture, our friends and I summarized the four quadrants of making money, and analyzed the characteristics of different quadrants and our own degree of financial freedom. Then, what methods and paths can we use to change the existing financial structure and move towards real financial freedom? In the next article, I will give specific paths for different groups of people to achieve financial freedom, which we will talk about next week.