The ground floor of economic behavior is not making any money – being unemployed.

One step above that is saying, “I’ll trade my labor for dollars. Pay me for each hour I work.”

That’s time for money and it’s the easiest economic outcome to create. That’s why everyone does it, especially unskilled workers. If you can deliver pizzas or flip burgers you can make this situation a reality tomorrow if you wanted to.

The next step above that is providing more valuable labor and negotiating a higher wage per hour. This is what school teaches you to do. You get “educated” for 15,000 hours and then engage in “higher education” and you come out the back end as a more valuable worker.

That’s the idea, anyway. So, if you follow “the process” you can pull a wage closer to $30 per hour (that’s the national average for higher educated persons) while those uneducated plebs are only pulling in $12 (or whatever the minimum wage is in their state).

The next step above that is a salaried position. It’s not really that much different. You’re still trading time for money, there’s just less micromanagement of the process.

These are the options the system tries to trap you in. It’s the game most people are playing. Except, if you’re playing the game, you’re losing.

Why Trading Time for Money Sucks

It’s not hard to understand this argument. Trading time for money sucks because time is the most valuable asset. You can always get more money but you can never get more time.

Time also doesn’t scale. One, because it’s finite, and two, because it relies on your output which is limited.

Everyone has 24 hours in a day. If you’re trading time for money across 8 hours and you want more money, you might decide to work for 12 hours instead of 8. But you can’t go much beyond that. You have to sleep, you have to eat, you have to do lots of other things that don’t make money.

You can get a raise and make more per hour worked, but that tends to be a very slow and incremental process. And guess what? If you’re unable to work for an extended period of time you can’t earn anything.

Lastly, based on the value of money and the amount of competing workers, it’s very difficult to get paid a wage that actually serves both your short-term and long-term needs.

This is why 78% of full-time workers live paycheck to paycheck and why only 39% of Americans have enough money in the bank to cover a $1000 emergency.

Even if your hourly wage nets you six figures, you’re still going to be putting out a ton of effort, you’re still likely to be trapped by a location and a schedule, and you’re still going to carry the weight of “no work, no pay.”

If you want to get off the treadmill, you have to start playing a completely different game.

One of the best ways to start is to understand how much your time needs to be worth if you want to build real wealth…

How Much is Your Time Worth?

determining your income target and how much your time is worth

I’m not going to walk you through this exercise from the position of “how much is your time worth based on your economic value.” We’ll take care of elevating your value later.

Instead, I’m going to walk you through this exercise from the position of, “how much does your time need to be worth to reach your financial goals?”

So, first question: How much do you need to pay your bills, eat the way you want, travel a bit, not stress, etc.?

We’re going to call this your “Standard of Living Number” or “SOL.”

Let’s say it’s $6000/mo. This is your SOL (standard of living) target.

Here’s the deal: Your SOL target doesn’t account for two important things:

  1. A Growth Engine
  2. Taxes

All your SOL does it let you live a comfortable life with no financial stress. It does nothing to build wealth.

The Growth Engine is how you build wealth. Your Growth Engine is money that you earn specifically for the purposes of earning more money.

Personally, I set a target of being able to put 40% of my income into my Growth Engine and still pay taxes without affecting my SOL.

You can set whatever you want – anything is better than nothing – but I like lofty targets so I chose 40%.

This means that instead of setting $6000/mo as your target, like most people do, you have to have a much higher target. Around $17,000 to be exact.

At $17k I would gross about $205k a year. $51,5k would go to taxes, $82,2k would go into my Growth Engine, and $72k ($6k/mo) would be free and clear to live on.

As you can see, most people who say “I want to make $6k a month” set an income target that’s 3x too low.

Freebie Alert

If you want to play around with the numbers for your own situation, use the handy Financial Freedom Calculator I made.

Now let’s talk about what this works out to per hour because most people calculate that wrong as well.

There’s roughly 260 working days in a year when you remove weekends and holidays and standard vacation time. To throw in an extra 10 days off and create a more rounded number I say there’s 250 working days.

Most people say, “Multiply 250 by 8 and you have your workable hours.” That’s incorrect, though, because nobody is actually productive for 8 hours a day.

I’m coming at this from the position of an entrepreneur who doesn’t get paid for dicking around like employees at big corporations do. As you’ll see, if you want to be wealthy, you have to start thinking along the same lines.

The average number of productive & billable hours in a day for an entrepreneur is two to four. If you’re a hustler, call it 4. If you want to give yourself more room for error, call it two.

So at 4 billable, productive hours per day, you’re looking at 1,000 productive, billable hours.

To hit your freedom number, you have to bill your hours at $205/hr.

Can You Trade Time for Money at That Pace With a J.O.B.?

What are you making in your current job? $15/hr? $30/hr? $50/hr?

How are you going to get to $205? Or if you have a job that you can literally bill 8 hours a day for, how are you going to get to $100/hr?

The likely answer is, you’re not.

If you want to hit your freedom number and actually start to build wealth, you’ve gotta start playing a completely different game…

3 Steps to Stop Trading Time For Money (Even if You’re Currently Broke)

money and time on a scale - finding balance

Now that you know that the status quo is never going to make the numbers add up, let’s figure out what you can start doing instead.

There’s three basic steps you can start with:

Step 01: Change your mindset around earning and spending.

A lot of people are confused by the question, “How much is your time worth?”

Here’s the answer to that, straight up: It doesn’t fucking matter.

Now that you have a target you know three things:

  1. You know how much your time needs to be worth. 
  2. You know that trading time for money (traditional earning) is never going to get you there – you have to earn differently.
  3. You know that foregoing lattes is a stupid fucking approach to trying to get ahead.

Now that you know what your time needs to be worth, you have to realize that all that shit you thought you were saving money on by doing yourself is actually costing you a ton of money.

If you change your own oil to save $30, how much did you really save? If it took an hour it cost you $175.

If you mow your own lawn to save $40, how much did you really save? If it took 2 hours, it cost you $370.

If you clean your own house to save $150, how much did you really save? If it took 4 hours, it cost you $670.

And no, saving $4 a day ($120/mo) on lattes isn’t going to do a damn thing to move the needle.

Get the point?

There’s a reason wealthy people don’t change their own oil, clean their own house, and mow their own lawn. It’s not because they’re lazy, it’s because they understand the value of their time.

And there’s a reason they buy $4 lattes – they want to enjoy themselves a little on the way to the top. If there’s one solid way to crush your spirit and motivation it’s to eat beans and rice for dinner every day.

Most people don’t have a spending problem, they have an income problem. And underneath that, a targeting problem.

Step 02: Build an asset that scales (like an online lifestyle business).

The number one way to stop trading time for money is to build a income-producing asset.

Entrepreneurs have known this for forever, but traditional entrepreneurship isn’t without problems:

  • Huge startup costs
  • Huge overhead
  • Big teams
  • Lots of risk
  • Tough to scale
  • Etc.

Thankfully, we’re the first generation to have the ability to pursue entrepreneurship through the internet with very little cost and very little risk.

We’re in the era of the online lifestyle business, my friend – what I passionately refer to as “The new F.U. money.”

Not only do you have the opportunity to build a scalable, income-producing asset, you also have a relatively fast path to location freedom and time freedom as well.

For as little as $100 you can start an online business that ends up singlehandedly getting you to your freedom number.

If you don’t understand why this is the case, let’s look at a real-world example:

Let’s say you’re a piano tutor. You teach piano to a handful of clients a day. Okay?

Right off the bat we know that you have precisely zero chance in hell of reaching the freedom number we arrived at earlier.

If you don’t change the game, you’re screwed.

So how do you change the game? You start an online business selling courses on how to learn piano.

Instead of teaching a handful of clients a day, you build a huge online audience and teach thousands through courses that you created once and sell in perpetuity.

Same pitcher, different ball game.

And I know for a fact there’s a piano teacher generating $30k+ a month online right now. This isn’t fantasy land.

Freebie Alert

If you want a roadmap for starting a successful online lifestyle business, download my free 1-Page Freedom Plan and watch my free Freedom Plan Master Class.

Step 03: Use your Growth Engine money to make you more money.

Before I explain this step, let me say this: if you’re a near total failure at this entire process and you only manage to hit your SOL goal, you’re still winning by most people’s standards.

Okay, so let’s talk about life beyond SOL.

The whole purpose of clearing 40% of your gross income is so you can intentionally use money to make money. It’s not money that you’re risking in any way, shape, or form and it’s not money that might get blown on things while you’re “trying to get by.”

How do you use it? You use it on income-producing assets. The top three options are:

  • Dumping it back into your online business to help it grow.
  • Investing in other business opportunities.
  • Investing in income-producing real estate.

As these income-producing assets start to pay you, that’s when real wealth begins to grow. Not only is your income going up, but the value of the assets you’ve invested in will be increasing also.

The goal now is to avoid raising your SOL. Every dollar that goes toward your SOL is a dollar that can’t go toward income-producing assets (this is why you shouldn’t be driving a nice car or living in a big house when you get to $100k/yr. You can’t afford it yet!).

How Has This Changed Your Perspective?

They don’t teach this stuff in school, which is damn near criminal in my opinion.

Chances are, you haven’t heard about income, budgeting, and financial targets talked about in this way. All you’ve heard is, “stop buying lattes” and “a penny saved is a penny earned.”

So how has your perspective changed after reading this breakdown? Comment below and let me know!

Kevin Michael Geary is the founder of Six-Figure Grind and host of the Six-Figure Grind Podcast. After building three successful online businesses in three separate niches in less than five years, he turned his attention toward helping other people start an online lifestyle business so they can escape the rat race, make an impact, and live life without limitations.

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