Money is just a by-product.

Money. We all need it.

Some of us need more, some less, but we all need it. At least, all who lead some form of contemporary life.

But how do you get money? Should you go and get a job at a bank? Hmm... nothing wrong with that if that is your vibe. Do you prefer to set up your own YouTube channel? Great! Go for it!

The funny thing about money is that it is a by-product of what we do. It is a by-product of the value we deliver. Let me explain.

Take a software engineer who works in Silicon Valley. Take a CEO of a large multinational insurance company based in Germany. Take a bus driver in the city of Edinburgh, Scotland. The software engineer can earn on average $150k per year. The CEO could probably earn, say, $5 million per year. The bus driver will take home about $35k per year.

Converted into an hourly wage, this gives around $72 for the software engineer, $2,404 for the CEO, and a mere $17 for the bus driver.

Let's look at this differently.

Suppose each of them has a daughter who needs a new iPad for school. The iPad costs $1,500. Does each of them need to spend $1,500? Well... of course... but not exactly.

The software engineer needs to work for 21 hours to earn enough to afford an iPad. So, considered differently, the software engineer is paying 21 hours of work for an iPad.

The CEO is paying around 36 minutes. The bus driver needs to do a few extra shifts on a weekend to be able to afford a down payment for an iPad loan.

By the way - nothing against bus drivers. I think they are doing an amazing job. Thank you for years of driving me back and forth between my university and home. I just think the world is an unfair place when it comes to salaries and money. Love you guys!

The point here is that time is money in more ways than we imagine. When we are employed, we trade our skills and invariably time for money. So yes, we are rewarded for the work we put in. However, what our employers demand is not really our time. They demand our skills and what these can produce. In the case of the software engineer, it would be a new piece of code. The CEO increases sales and profits for the company he works for. The bus driver gets people safely from A to B.

At the core of our lives are our skills, experience, and education. This applies to everyone, from the bus driver to the CEO. Skills can either enrich us or keep us in poverty.

Skills can also generate another source of income, one that doesn't depend on the number of hours worked. It's an income that generates money even while we sleep. I'm talking about passive income.

How many of you have read Harry Potter? Congratulations if you have! It's outstanding! And if you haven't, congratulations too! You get to experience it for the first time.

J.K. Rowling is incredibly wealthy, with a net worth exceeding $800 million.

Ian Rankin is also an author and very successful. His books have sold millions of copies, and his net worth is around $10 million.

Why is J.K. Rowling so much wealthier than Ian Rankin? Did she spend more hours writing the Harry Potter series? It's uncertain, but I don't think so. Is she a more skillful author? Many would say yes, while others might disagree.

What I believe made her so wealthy is the value her product provided to her customers.

Harry Potter books became some of the best-selling books of all time. The Harry Potter movies generated millions of dollars, and J.K. Rowling received a fair share of that. On top of that, there's the entire franchise deal with Harry Potter merchandise sold all over the world. People love Harry Potter.

There are, however, other ways to make passive income. Some people use investments, some create videos online, some create podcasts, some create music. The list is long. All require skills, time, and dedication. There is the initial investment of time and then sales afterwards.

Time. Skills. Value.

Your wealth can be boiled down to these three things: Time, Skill, Value. They go hand in hand and can be formulated as below.

Skill x Time = Value

M | K