In my past 12 years schooling time, there is no single lesson taught on money. Even the 7 years in Polytechnic and University, it was not taught as well. So end up , I spending about 19 years in education, missed the most important lesson which is about Money.

I only learnt this lesson at the age of 35. After spending 13 years in the corporate world. 13 years covering 3 big organizations, and there is no one know well about this Money lessons. It seem that our educational system has failed.

In our normal education, we were taught that in order to earn a Salary, we have to use our energy and time in order to convert it to our paycheck. The formulae is as follow:

Pay check = Hourly Rate x Time

For example, go to the Mc Donald restaurant to become a waiter/waitress, the hourly rate is RM4 and work for 10 hours a day, you will get RM4 x 10 = RM40 a day.

If you work for a month for 30 days, monthly pay check will be RM40 x 30 = RM1200

This formulae is well understood by everyone as our parent explains this to us. Thus, I conclude myself that Time = Money. In our Chinese verb also said that Time is precious and it cost money, once it gone, it will never return ~ “一寸光阴一寸金，寸金难买寸光阴”

Re-study the formulae again, Pay check = Hourly Rate x Time, basically there are TWO factors limiting your earning which is hourly rate and time. We all know that TIME is the limited commodity in the world. THe amount of time we have in any corners of the world will be the same for everyone. No one has more time or no one will have less time.

As for hourly rate, it is direct correlate with the skill you have in order to generate the value to the business. If you are looking towards to make more money, you have three choices.

You have to work for more hours so that you can increased your paycheck. In other words, I have to worked over time say every day 16 hours a day. My pay check will be RM4 x 16 = RM64/day.

For this choice, we have to sacrifice our night time or weekend in order to earn more money.

Is to upgrade your skills in order to increase the hourly rate. For example, after finishing secondary school, you can work at Mc Donald for RM4 per hour. When you complete your Diploma, and can become a technician, the hourly rate could increased to RM10/hour. If you have Degree from your bachelor study, the hourly rate increased to RM15/hour as an Engineer.

Look at it carefully, finishing secondary school and still need to spend another 7 years in tertiary in order to upgrade you skills. The hourly rate is increased form RM4/hour to RM15/hour.

I take the engineering path because this is what i went through from technician to engineer. Of course it apply the same to the accountants, doctors, programmers etc from different level of skill that pay different rate.

Is there another choice since the formulae only have two factor Time and Hourly rate? Third choice will not be following the same formulae but with different model of making money. Not many people able to comprehend this model well as it was not taught in any conventional school in our society.

In another words, money can be made independenly of TIME. You can make money which not involve your time. Got it?

Back to the Choice 1 and Choice 2 illustrated above, when TIME is spend to make money, we called it ACTIVE income. But for Choice 3, it is the other way and was named as Passive income. You may said that, I knew Passive income but not able to do it.

So let me explain again, Choice 3 mentioned that we can spend time to learn some skills and work for it now so that in future, it will generate income for us even not using our TIME for it. But there are so few people willing to put in the effort to work this out. They rather to believe Choice 1 and Choice 2 are the ways to do it.

Passive income is earning money from you past effort. It does not mean that you will earn passive income without working on it. The effort you put in, it will get you return in the future. Thus, your past effort will define you future paycheck.

Conclusion for today writing is we have 3 choices to make money, Choice 3 is the one that not taught in conventional school syllabus. From 35 years old onward, I do understand that whaterver my effort put in, make sure that it will generate income for me in the future. Wish you able to understand the concept now.