Rich man's three ways to get rich and stay rich ーお金持ちになる方法

There are four ways to make money, and I will be describing three today.

1) "expansion of time into money"
The first is called "expansion of time into money".
You work in a company with a fixed wage, say $20, or $22.
So in order to make more money in this situation, you just work more hours.
Your expenses will go up a little more as put more time into work, but the rate at which your income goes up is fast compared to expenses at each additional unit of time; this means the goal is for you to push towards the right in the below graph:

But like the graph shows, the more you try to push to the right (thus getting more net income) you will wreck your body. Also, no matter how many hours you work per week, it will usually take you at least 10 years just to get 100k in savings.


2) "Service - set any price for value"
The second is called service, where you can set any price you want as long as it produces value for the client. In this case, not only can you push to the right of the graph to get more money as you increase the conversation of time into money, but you can also increase the amount of money you get for each unit of time you convert. You can see this from the below graph.

 So in the graph, you are not trying to move to the right and convert more time into money; you are trying to increase the rate at which you convert each unit of time into money.
So instead of moving on the graph to the right (or left), you are actually moving the whole income curve upwards as you set a higher rate for the service you provide.
This can be seen as you move from income A curve to income B curve - this increase the amount of money you get at all values of the graph, no matter how many hours you work.
As you move the income graph higher and higher, you can decrease the same amount of time needed to save 100k - from 10 years in the first example (fixed rate at $20/hr), to 5 years if you double the rate ($20/hr to $40/hr), to 3 years at 3 times the rate ($60 compared to $20/hr).
The problem with this is that the only customers you can have as you increase the rate are those are can afford, limiting the amount of people you can pitch your service too. But as we can in the third example below, customers doesn't necessarily have to be individuals but can also be businesses (businesses = customers with exceedingly more disposable money than an individual at the same moment in time).


3) The third is called "a system of business", which isn't just a 'business', but it has to be a system which produces income for you without any extra work besides maintenance. A system that can work all the time now is tricky because the world changes so fast, but you need to have a system - rules in place that when new employees or new things happening you can just modify a few things, rather than starting from scratch again and again. In this case, it is pretty much providing a service to customers, but with a twist.

This twist is that it isn't just you helping to provide the service to customers (you will not have time at all), but you get people into a company to help you in performing functions with the business system you have created. These people are employees, you are the boss which means the business gets the overall boost in sales (because the company is using the mental and physical labour of 3 or 4 or more people), but you decide the ratio in which that profit gets divided between yourself and the employees.

As the graph shows, the employees provide you with extra labor within your business system in order to boost the service provided to customers (not only individuals but also other companies); and you decide the ratio in which the profit the company gets divided between the employees and yourself (in this case 80% for you, and 20% for the employees).

So for example, if you and your employees combining your labour power together in one company charges an individual $300/hour for providing them a service, and you divide that $300/hr into 80/20, you would get $240 and three employees would get $20 per hour. This is the unfair division of a company's profits into employer and employee shares. Why do people support this unfair divison? Culture - it's set into people's minds within their family life and university life. I will talk more about culture in a later post.

But for that $240/hr that the employer gets, he would probably put that money back into the company for innovation/expansion because his money is the company's money (retained earnings), rather than distributing it out as a director of the company. But I think these three examples shows the importance of learning a business system and getting it out there in order to become rich.

The other two ways of course you can also be rich, but it will just take a massively longer time to get a return on your effort of time and money.