Sure, we all would love to become millionaires and retire young, but most of us are told we can only do that if we marry rich, invent the next Microsoft, or win the lottery. Too often do many of us neglect the fact that there are already very simple ways to make money without needing to do anything drastic to get there.

So to help ease people into the world of Financial Independence, Retire Early (FIRE), I want to break down how to four common ways anyone can make money.

The Four Ways To Make Money

When talking about generating a source of income, the most common metaphor people tend to use is a “faucet” that “flows” in revenue. I personally like to think of making money more as a growing a tree. You have different types of trees that have their unique requirements and amount of time to grow. You don’t give a tree that right amount of water, soil, or light, then you’ll find yourself with one dead tree.

Similarly, when we want to grow our money we need to approach each of them in their own way if we expect to see a profit.

So let’s begin by talking about the 4 types of “trees” for making money.

Tree 1: Employment

The employment income tree is one of the most commonly grown out of the four. It also becomes one of the most pivotal trees to have when starting out on our FIRE journey.

While working for someone else limits your potential financial growth, you trade this off with a safety-net that can only come from having a steady 9-5. So long as you put in the hours the company requires you to work, you can expect a paycheck at the end of the month. This consistency helps us set-up predictability in revenue, which will be key to building our budgets and investment plans at the start of our Quest.

Many of us can also take advantage of various company perks offered through the company such as insurance options, and retirement plan. Both of which we can hack to drastically increase the amount of money we have in our pocket that’ll most people in these plans don’t take advantage of.

In short, consider this tree as a stable-growth tree. It’s not considerably difficult to get one of these sources of income, and once you do, maintaining it is usually easy to do. With this tree going you can take a breather from financial stresses by using it to assert your basic financial needs. This will allow you to take more risks generating other revenue types since you’ll always have that 9-5 to fall back on if that risk doesn’t work out.

Although it is very difficult for many to achieve a FIRE lifestyle purely through employment, we can still use this as a launchpad to help us grow other income trees to get us much close to our financial goals.

Tree 2: Side Hustling

A side-hustle is, simply put, any income that is generated supplement to your 9-5. Whether you are babysitting, selling old books, or collecting cans off the street, if you’re making extra income it’ll fall under the category of a side-hustle.

The most attracting benefit of a side hustle is that you do not need to be proficient at any one thing to start one. If you are able to walk, you can earn money by walking other people’s dogs. If you find you actually don’t like being around dogs, then it’s easy to just drop that side hustle in favor of a new one.

Since side hustling can vary in both potential revenue and effort to do, this tree ends up becoming the most diverse revenue type to pursue. This also creates an opportunity for us to grow multiple side hustle sat a time that’ll generate more revenue overall.

Many people tend to side-hustle until they get a 9-5 going then completely stop. However, this loses them one of the most potential profits to get them closer to FIRE. If we’re already tending to a healthy Employment Tree, and are comfortable enough to live off that, then any profits that we gain from Side Hustling can simply be used towards building other revenues. Plus, if one of our side hustles ends up being very profitable, we can use it to grow a much more prosperous type of tree, Entrepreneurship.

Tree 3: Entrepreneurship

Entrepreneurship is a supplement to side-hustling, but there are some very key differences between the two.

A side-hustle is seen more for low-hanging fruit that growing and discarding them is easy to do. This is something that can completely be done independently and doesn’t always require a special skill to do. An Entrepreneurship is more of the higher-yielding growth that requires some extra time, effort, and skill to make profitable.

If you find you have an in-demand skill(Which anyone with a 9-5 will have) or are having continued success in a side-hustle, then that can be transformed into a business. When you do have a business going you can leverage off this work by managing other employees. This helps exponentially decrease the time and effort to get the tasks done while still growing revenue. To quote, Grant Sabatier in his book, Financial Freedom,

Why mow lawns when you can hire someone else to do it and still make a majority of the money

In addition to this tree type having a much higher potential profit than a side hustle, if your business is successful enough you can transition it to making it your new 9-5. True, there are risks that come from turning a side-hustle into a business, but these risks can be largely mitigated if you remember to tend to other types of revenue trees you grow.

This leads us to our fourth and last type of money tree that can be grown, Investment.

Tree 4: Investment

Investing is arguably the highest risk and highest return out of these four trees. It’s also the primary source of passive income used by many in the FIRE community.

It’s no surprise. When done right, you can find yourself transforming what little money you save today into a hefty profit down the road.

Before going too far into this, let me clear one misconception up, Investing is NOT gambling. Gambling has a financial return that can either grow or lose your investment based completely on chance. While investment has a history of growing a person’s finances significantly so long as it’s done intelligently.

Despite all this, most people aren’t really familiar with where to get started with investing making them unable to take advantage of a significant contributor to financial independence.

There’s a certain level of research that is required to yield a successful Investment tree. Words like: 401Ks, Roth IRAs, and Index Funds may sound like financial mumble jumble, but they are some most recommended components to FIRE that everyone should be taking advantage of.

It is why it’s ideal to start with learning about the differences in benefits having these investment accounts can provide first off. Once done, the level of management becomes easier to do.

Learning to Grow

So now that we have identified the four ways of making money, the next step is to figure out how to best grow each of these so we can yield the highest return collectively.

Since there is a lot to cover for each, the upcoming posts will dive into each tree separately to provide a thorough look on growing them. Once we do, we can dive further into hacking your employment opportunities, how to best take advantage of a side-hustle, basics of growing a business, and how to invest intelligently.

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See you guys next time on Prometheus Quest!