Income types can be categorized into two broad categories – earned income and passive income. For most people, earned income is all they know – working for money. With earned income, you are working for money – essentially trading time for money. The more time you put in, the more money you make. For most senior staff, there is no provision for overtime. You are rewarded for putting in.
The challenge with working for money is that there are only so many hours of your day you can trade for money. You can only steal from the time you ought to have for yourself, family, recreation, sleep, etc.
With passive income, money is working for you. You are essentially trading money for money (you can also trade ideas for money). You put in the initial work and create assets that keep generating cash flow long after you have stopped working on it. With passive income, the more experienced you become, the less work you need to put in.
Signs of addiction to earned income
Earned income is addictive, especially if this is the only income source you know. The mere thought of going off earned income sends chills down your spine. This explains why many hold on to jobs they hate, dreading Mondays and thanking God for Fridays. The biggest threat anyone can make to such a person becomes ‘you will lose your job’.
There are similarities between addiction to cocaine and addiction to earned income.
You get a temporary high
Each time you take it, you get a temporary high, especially if the dosage has just been increased recently. After a while, you get used to the dosage and yearn for a stronger dose. The more the dosage is increased, the more hooked you become and the tougher it becomes to kick the habit. You feel good when you get the credit alert, and this lasts for some days until bills (especially those you missed out on in your budget) swallow up everything and you are back to where you were before the alert came.
It controls your life
Like cocaine, your salary takes over your life. It controls your daylight hours and determines what you can or cannot do in your free time. It determines where you live if you can have your weekend free and when you can go on vacation. For women, some jobs determine when you can start a family. Some jobs separate families, and render some wives economic widows. In some cases, the separation becomes permanent. One of the partners finds a new love interest and the marriage hits the rocks. Your life is essentially wrapped around it, and everyone around you understands. Anytime you bring up your job as an excuse, everyone backs off.
You need regular predictable doses
Like cocaine, you need a regular fix. If it does not come as expected, your finances go into crisis mode. You look for whom to borrow from. Regularity is important. You hear many say that they prefer a smaller salary that is regular than a fatter one that is not.
If you are out of work for a while, your immediate reaction is to look for another one, no matter how much you hated the last one you have been set free from. The mere thought of living without a monthly credit alert is unthinkable.
You suffer withdrawal symptoms
If your salary is stooped, you suffer withdrawal and panic symptoms similar to drugs. You are ready to do anything to get another fix. You find it hard to think straight. If you are a man, you think your manhood has been taken away from you. You become angry, and irritable, and may take to drinking and domestic violence. The home may become a battleground. You may even develop suicidal tendencies in extreme cases.
Rather than use the time to think how you can use what you have to get what you want, you are ready to stay idle and home for months and sometimes years focussing on getting another source of regular fixes. If a business opportunity and a job offer come together, it is a no-brainer which option you will go for.
You find it hard to build wealth
As an addict, you have a lifestyle that is wired to consume everything that comes in. As your income goes up, so do your expenses. You hardly have the time or inclination to build wealth. Your job stands in the way. It lulls you into a false sense of financial security, hence you don’t bother to save and invest. Your salary is your defense against uncertainty, especially if you are working for a big company that seems too big to fail.
It is hard to kick the habit
Breaking this addiction is quite difficult and takes a steady dose of renewing your mindset (deprogramming – especially if your parents were addicts too) through financial education, personal growth, and development, acting on what you have learned, and growing multiple streams of income. You don’t need to quit your job to break the addiction. You can wean yourself off the habit by living on other sources of income and leaving your salary alone for investment, projects, etc. When you stop living on your salary or primary source of income, you will not miss it much the day it stops coming.
For those determined to quit their jobs to go do other things with their lives, they need an extra ingredient – the courage to take the plunge.
There is nothing wrong with being addicted to earned income. The important thing is to know what is going on (admit you are addicted) and determine if you want to keep the habit with its consequences or kick it. It all boils down to choice.
