THINK deeply about this: Our work does much more than allow us to earn a living; it permits us to build our lives.
It was the late Peter Drucker, often referred to as the original management consultant, who wrote: "Work is an extension of personality. It is achievement. It is one of the ways in which a person defines himself, measures his worth, and his humanity."
This true-blue consulting genius died in late 2005, just eight days short of what would have been his 96th birthday. It was Drucker who coined the term "knowledge worker" way back in 1959.
Today, more of us are bona fide knowledge workers enabled by advances in computers and other smart devices, the Internet, and ubiquitous versions of the all-important "cloud".
The exponential expansion of the "K" (or Knowledge) Economy has helped the Earth's gross world product (GWP) to more than triple from US$31 trillion in 1995, to an estimated US$105 trillion this year (www.visualcapitalist.com/visualizing-the-105-trillion-world-economy-in-o...).
Having said that, frenetic economic activity has also boosted the need for non-K workers dominating the blue-collar workforce.
For everyone who works for a living, here is the "Total Income" (TI) formula I sometimes write about. It's encapsulated in this brief equation:
TI = AI + PI
where AI is Active Income and PI is Passive Income.
In last week's column, I elaborated on PI; you'll find it at this archive link: www.nst.com.my/authors/rajen-devadason. Today, though, we're going to focus on AI (again, in this context: Active Income).
KEEP LEARNING
Our capacity to earn money actively over the three, four or five decades of our working lives is, for most of us, our largest asset. In the teachings of financial guru Robert Kiyosaki, a real asset puts money in our pockets while a real liability sucks money out of them.
While those definitions don't precisely match the accountant's definitions of assets and liabilities, from a personal finance perspective, Kiyosaki's views are useful.
Our jobs or our actively run businesses that bring in AI are the channels of economic benefits like food, shelter, security and life options we all need and want. Usually, we aim to increase our AI from one year to the next.
Our innate capacity to work harder stems from our work ethic. If you have a superlative work ethic (and this is the ideal), you will earn a reputation of being the hardest worker in your organisation. That's a starting point for success. But it isn't our goal.
As time passes and you gain expertise in your vocation, you should keep improving your capacity to:
1. Learn; and
2. Learn to learn!
Bottomline: Commit to lifelong learning.
Of course, you don't need to heed my advice, but I fear you'll pay a debilitating price if you ignore it.
As you toil to increase your economic value to your subjective "world", our objective world in turn will pay you more for whatever it is you have to offer.
WORK HARD
Let's circle back to TI = AI + PI; as your AI rises, if you also curb the increase in your expenses, so it goes up more slowly than your net active income escalates, then your monthly cash flow surplus must inevitably balloon.
If you then channel some of those regular cash flow surpluses into PI generators like cash savings, EPF, stocks, unit trusts and rental properties, your PI will in turn go up, which will further boost your TI. Sweet!
Thus far, I've painted a word-picture of a coveted future. It, however, can only morph into reality if we work — long and hard.
In my favourite personal finance book, The Richest Man in Babylon, there is a chapter set 2,500 years ago in that city. It tells the stories of various characters who have been sold into slavery for various reasons. One such person is Megiddo, who possesses a phenomenal work ethic that later allows him to purchase his freedom from his owner, and to also rebuild his life by reuniting his family with him in Babylon.
But before that, while things are still dire, Megiddo generously shares his thoughts on industry and diligence with a younger slave, Sharru Nada. He heeds Megiddo's words and, later in life, becomes, in this story, "the merchant prince of Babylon".
I urge you to buy George Clason's classic and to study it despite his intentional use of archaic forms of English to underscore the yawning chasm of time between then and now. Until you snag your own copy, though, focus on Megiddo's words to Sharru Nada about work:
"Some men hate it. They make it their enemy. Better to treat it like a friend, make thyself like it. Don't mind because it is hard…. Promise me, boy, if thou get a master, work for him as hard as thou canst… work, well-done, does good to the man who does it. It makes him a better man."
Man or woman, boy or girl, know that winners almost always need to work hard and work smart.
Be a winner.
© 2023 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on Twitter @Rajen Devadason and on YouTube (Rajen Devadason).