On working smarter and making money work for you

I’ve given a lot of advice about business, investments and personal finance. And all throughout, I’ve always mentioned the importance of hard work to achieve one’s goals.

For me, there is no substitute for good old-fashioned “labor” and if you want to make your dreams a reality, then you need to put in the time and the effort.

However, there are two pieces of advice about money and wealth that many financial experts often give. Sadly, most people tend to misunderstand these “tips”, which causes them to eventually fall short of their goals.

But I’m hoping to change that today.

Work smarter, not harder.

This is very good advice if you ask me, because “being smart” about work is simply leveraging your knowledge and resources to accomplish things faster and more efficiently.

But many people miss out on the operative word of the first phrase. Remember that—work smarter—still has the word, WORK in it.

This means working smarter is not about being lazy. It’s not just about delegating tasks, automating processes, or getting help and letting others do all the work.

For me, working smarter means working hard first, then finding ways to make things more efficient for everyone. After which, you then use the acquired free time to work (again) on new tasks.

Don’t work for money, let the money work for you.

Again, this is very good advice that many often misunderstand.

If I were to improve this, I’d rephrase it to say, “Work hard for the money, then find ways to make the money you earned work for you.”

Do you see the difference? Too many times, I’ve seen people chase passive income as if it’s the Holy Grail of wealth—it is NOT.

Passive income is just a “tool” that you use to achieve the ultimate goal—financial freedom. And just like any tool, you need to learn how to properly use it.

If you want passive income… if you want to learn how to make money work for you, then you need to understand three things:

Passive income takes time to build, which means you have to be patient.

They say real estate is a good source of passive income—but you have to understand that finding a buyer or a lessee to your property can take a while; not to mention the amount of time you have to spend looking for a good property to flip or buy.

Building passive income is not a race, it is a sprint marathon you need to prepare for.

Pure passive income is often too small for you to live by alone.

A time deposit account is an excellent source of pure passive income—but if you plan to live on a 5-percent annual interest, then you would have to save up to 20 times that amount. This means you need P4.8 million in the bank to get roughly P20,000 monthly.

Now, how easy is it to save P4.8 million? Almost impossible if you’re lazy.

The best sources of passive income are those which came from hard work.

Royalty income is passive income that you earn from your intellectual property or copyright, it is payment for the right to use something you created.

But if you want to receive royalties, then you have to work hard in coming up with a profitable invention, or writing that best-selling novel, or building that successful franchise business—and these things don’t happen overnight.

Work hard, then work smart and make your money work for you. Rinse and repeat until you become rich.

Fitz Villafuerte is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 86th RFP program this November 2020. To inquire, e-mail info@rfp.ph or text at 0917-6248110.


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