The "Cashflow Quadrant" by Robert Kiyosaki explains the 4 basic ways to make legal income.
EMPLOYEE: Has a job. The income is based upon the position of the employee, not the person itself. Suppose you compare two teachers. One may be an excellent teacher who comes in early, has his or her lesson plans prepared before-hand, gets involved with the development of each student and does more than is asked by hie or her supervisor. The other teacher comes in late, requires a substitute to fill in for him or her frequently, has no lesson plan prepared, and can care less about the students. Who would get paid more? Typically they both would get paid pretty much the same. This category is compensated by the position they are in, not by the quality of they work.
SELF EMPLOYED: OWNS a job. This category may include occupations such as Lawyers, private doctors, private hair dresser, etc. Their job controls them rather than them having total control over it. If these people do not work or decide to take a day off, they wouldn't make income for that period. This category runs the risk of these individuals to either max out their time or burn out from over working.
BUSINESS OWNER: OWNS a system. Leverages his or her time but having others work for them. Just like a real estate broker hires agents under him or her. Each time and agent makes a sale, the broker gets paid a percentage of the profits. Or even a major corporation may have a CEO or founder, president, managers, supervisors, and a wide array of other sub-level positions involving labor or administrative work. Each person below help create a product, distribute, maintain, or otherwise aide in profiting for the corporation they work for. The owner or whoever is on top gets a percentage and remainder if paid to everyone else that works for the owner. Basically the owner has gotten paid from the efforts of others without doing the actual work.
INVESTOR: Has his or her money working for them. Either through stocks, commodities, or finding a way where the value of their investments appreciate to make profit.
Due to social conditioning through school, upbringing by parents, the media, etc, the majority of people in the country has been taught that going to school to get a degree to get a good job with benefits was the goal they should have; even though the people teaching this may not be in the best financial or income position either. The majority of the wealthiest people in the world are business owners or investors. While the majority of the country is being taught that working for someone and relying on benefits is the path to success (the red side of the quadrant), the wealthy have learned that leveraging their time by having others work for them is one of the best paths to financial freedom and success (the green side of the quadrant).
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