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Have you ever wondered how the rich can effortlessly scale their income climbing up the wealth pyramid while the rest of us struggle just to make ends meet? I’ve spent a decade trying to figure out the money-making secrets of millionaires and how to think like a millionaire to scale my income like them.
After reaching my first million, I’ve learned that the wealthy have mastered certain unspoken rules of wealth that we never get to learn at school. These are some of the simplest yet most profound untold truths about money, which could potentially pave your way to a life of financial freedom.
In this post, we’ll take you on a journey through the different stages of money-making methods, from trading your time and energy for money to leveraging others and making money work for you. We’ll uncover the layers of financial knowledge that can transform your financial future if you allow the seeds of wisdom to sprout and grow in the back of your mind.
Growing rich starts with thinking rich.
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Table of Contents
The Base Level of the Wealth Pyramid: Trading Labour and Time for Money
Let’s start at the ground floor, where most of us begin our journey – exchanging our labour and time for money.
This is the most straightforward way to earn a living. You clock in, do your job, and get paid a fixed hourly wage for your time and labour. Whether it’s serving coffee, driving buses, or working in a shop, it’s about the hours you put in.
It doesn’t matter if you’re smarter than your peers, more efficient than your colleagues, or have a natural flair for doing what you do. You still get paid based on the hours you work.
Ever find it frustrating that your colleague, who seems to be slower than you and less efficient, ends up doing less and still gets paid the same? Ever notice how your supervisor may seem less competent, but still receives a higher pay purely because they have been in the company longer? It’s not that you’re being treated unfairly; it’s just the nature of the wealth pyramid at this level of the financial game.
These types of jobs offer a relatively more stable and secure lifestyle; however, the downside is your earnings are capped by the number of hours in the day, your opportunities are confined within the company, and your skills and talent may not be fully utilised.
Before you know it, as life goes on, your energy levels start to drop, and you grow more and more resentful of the treadmill, but the bills don’t stop coming. It’s a hard truth that at this stage of the wealth pyramid, your potential to earn more doesn’t go up as much, even as you gain more experience. In other words:
Time is against you.
Sadly, this is the reality for many. While achieving financial freedom while stuck at the base level seems out of reach, it doesn’t have to be the end of your financial growth.
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Stage 2: Trading Knowledge and Time for Money
Once you reach the second stage of the wealth pyramid, this is where your knowledge and skills begin to pay dividends. At this stage of the wealth pyramid, professionals like doctors, lawyers, and engineers use their years of study and experience to earn more than just the hourly wage.
As you gain more expertise in your field, your value increases. Unlike the jobs at the base level, where an hour is just an hour, the money-making secret at this stage of the wealth pyramid is an hour can be worth more because of the specialised knowledge you apply in that time. A seasoned professional can solve problems faster and more efficiently, which means they’re worth more as time goes on.
Here, time starts to become an ally.
But there’s still a limit. Even with a higher income, you’re still exchanging your knowledge and time for money, and there are only so many hours in a day you can work. To really break away from these constraints, you need to look towards the next stage, where the true potential for wealth lies. Here, it’s not just about working smarter; it’s about making your resources work for you to finally achieve true financial freedom.
Stage 3: Leveraging Other People’s Labour, Knowledge, Skills and Time for Money
Now, we’re stepping into the realm where the financial game changes entirely. At this level, it’s about understanding the power of leverage – using other people’s time, skills and resources to build wealth.
Think of a business owner who employs a team, or an investor who funds a start-up. They aren’t trading their own time for money; instead, they’re investing to create more income sources.
At this level, your money is not directly tied to the hours you work. Instead, you earn from the work that others do. It’s a shift from being a player on the field to becoming the one who owns the team. By harnessing the collective effort of a group, you can multiply your earnings without having to put in more of your own time.
At this stage of the wealth pyramid, you’ll also acquire intellectual property, such as writing a book or creating a course, which can be sold over and over again without any extra time investment from you. It’s about creating systems that generate income – something that can continue to grow, even when you’re not actively working on it.
While in the previous stages, time was a currency spent in exchange for money, at this level, time becomes a tool. This is where the concept of ‘passive income’ comes into play, where your money works tirelessly, whether you’re actively involved or not.
It’s about creating a sustainable system that generates income independently of your direct effort, allowing you to focus on expanding your team and portfolio, exploring new ventures, or dedicating time to your personal life and passions. This is how you can scale your income exponentially.
At this stage of the wealth pyramid, time works for you, not the other way around and this is when you can achieve true financial freedom.
Here, time becomes an asset that you can strategically invest in.
You’re no longer bound by the number of hours you can work because your wealth isn’t tied to your time. Instead, your wealth grows with the strategic decisions you make about where to invest your time in managing your investments and opportunities.
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Stage 4: Leveraging Capital
If you can reach this level of the wealth pyramid, congrats, this is where you’ve mastered the wisdom to scale your income and turn capital itself into a tool for generating more wealth. At this stage of the wealth pyramid, existing wealth unlocks even greater financial potential. It’s about making strategic investments that work as a multiplier, significantly increasing net worth without the direct trade of personal time or labour.
At this level, the focus is on investment, be it in the stock market, real estate, cryptocurrency, venture capital, or other vehicles that can yield high returns.
Wealthy individuals at this level often have financial advisors and a team who help them grow their capital. Typically, they have a higher risk tolerance, understand the risk-to-reward ratio, and, with the right knowledge and strategy, the rewards can be substantial.
The beauty of leveraging capital is that it’s limitless. While there’s a ceiling to how much you can earn by selling your time, there’s no cap on investment returns.
Your money could be working across continents, in different industries, and within various markets, all simultaneously. You could be sleeping, travelling the world and your capital is still accruing value somewhere around the globe.
Here, time is not spent, but invested.
At this level, the rich don’t work for money – they have money working for them. It’s the ultimate financial goal for many: to reach a point where their wealth is self-sustaining and growing, independent of their personal efforts. This is the essence of financial freedom, where time is no longer a commodity but a luxury.
Through the Stages of The Wealth Pyramid
As you consider these stages of the wealth pyramid, think about where you stand and where you want to be. Each level requires a different mindset and set of strategies. Climbing to the top might seem impossible, but understanding how to scale your income is the first step towards building a future where your time and your wealth are truly yours.
Starting from the ground level, where time is a direct trade for money, climbing up to where time becomes an ally, an asset, and finally to leveraging capital itself, where your wealth works independently of your personal efforts.
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No matter which stage of the wealth pyramid you currently find yourself in, the path to the next level starts with financial education and a shift in perspective.
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So take this knowledge, apply it to your life, and start crafting your strategy to move up the stages of the wealth pyramid. Your financial future isn’t just about what you earn, but how you earn it, how you grow it, and how you use it to not only enrich your life but also the lives of those around you.
And soon, you’ll realise the best part of the journey to financial freedom is about the wisdom gained, the people met, and the challenges conquered along the way. Aim high, start where you are, use what you have, and do what you can.
All the best and we hope to see you in another chapter.
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