Our Earnings.

Our Earnings - Money Matters.

When we talk about economics, the first thing that comes to mind is money and how it can be earned and how it could be saved without sacrificing our needs. To fulfil our needs, we have to spend money. To spend money, we should have money. To have money, we have to earn or we have to own it from our past savings. Even if we own enough money from our past savings or through an ancestral gift, we have to earn to get going in future. In this post, we will discuss about our earnings.

How we Earn?

We earn money as compensation for the work we do. Work which generates income usually is in the form of a service of some kind. We can classify all work as a service because ultimately, that's the truth. Whether we do a job for a salary or pursue a profession for a fee or do business to earn money or undertake some other activity - they all form a part of service. Even production or manufacturing is a kind of service because they are meant to serve somebody through the creation of goods. In short, we earn for the service we provide.

As money is the reward that we get for the work we do, selecting and doing the work which gives us the maximum monetary reward is important. People pursue different occupations for their livelihood. Some people do jobs provided by others and some people do their own business while some others become professionals in their chosen fields. All jobs or businesses or professions don't guarantee good income initially as earning is usually time consuming.

Earning through Job.

When we do a job for a firm or company, we get compensated for our work through salary. The remuneration package is always decided by the employer and agreed by the employee.

The remuneration depends upon three main factors:

(1) The position or designation: The position applied for and the level of authority and responsibility associated with that position.

(2) Education and experience: Our level of education and our experience in the field. Education increases our confidence and our understanding of the work we do. Experience comes when we continue our work for long.

(3) It is decided by management: Salary is decided by the management. While we may have the qualifications and experience for a position, how much to be paid as salary for an employee is ultimately decided by the management. Every firm sets a limit on salary to be paid for all positions from top to bottom levels of employees. This is done to control cost on salary.

Earning through Profession.

In a profession, we earn money as fees by providing our service to clients or customers. In any profession, we are fully responsible for the service we provide. In a profession, the scope for earning is higher than a salaried job. Doctors, lawyers, artists, sportsmen are examples of professionals who earn good income.

The amount of money which professionals earn depends upon the following factors:

(1) The selected profession: The profession they select and the knowledge and skills they possess for that profession. Since it is an individual's choice to select a profession of his or her like and that decision is personal, care should be taken to go for the most appropriate one.

(2) Professional qualifications and skills: It will depend upon their qualifications for the profession and their skills in the field. Some professions require relevant qualifications and some don't. The profession of a doctor or a lawyer requires academic qualifications of high level, whereas an artist or a sportsman don't require a mandatory academic certificate to qualify for the profession.

(3) Their popularity: The clients and the customers that they have and the popularity and goodwill that they maintain in society through their work.

Earning through Business.

In business, we earn money through sale of our products or services. Sales is the lifeblood of business. We earn money by closing sales. A businessman invests money, time and energy to set up his business and earns money by selling his products or services.

Earning in business depends upon:

(1) The type or the kind of business: The kind of business and the investments made to start and maintain the business and the efforts put in to run the business.

(2) The quality of products or services: The quality of products or services and its pricing. Pricing has a major role in business. Competitive pricing is a business strategy which motivates product growth.

(3) The customer base: The number of customers they have. The more customers we have, the better.

Our income reflects our success or failure in any occupation. Success in any field depends on hard work. Nothing compensates hard work. Whether its business, profession or job, to earn enough, we have to put in our maximum efforts. We have to be consistent in our efforts to earn money.

Difficulties of Earning in a Job.

• In a job, the scope for earning is limited due to the fixed nature of salary and the fact that most performance related incentives are difficult to gain due to high targets set by the company.

• In a job, a hike in salary happens once in a year and is often based on a set percentage of our basic salary. So, if our present salary is low, the increment will be low as well.

• An employee has to be consistent in his job and should be willing to take new responsibilities and improve his skills and learn new things. These are the qualities an employer seeks in his employee. If we lack these qualities, we diminish our chances to progress.

• We can change our job if we get a better one. However, it is not recommended to change jobs frequently as it may not always be rewarding.

Difficulties of Earning in Profession.

• Unlike job, we cannot change a profession quite often. Once we select a profession, we have to stick to it to become a master. A professional requires great determination to succeed in his field. If we don't have the determination to face the challenges of a profession, we fail.

• Professionals get fees for their work or service. If we are a professional, we can demand the fees as per our assessment of the quality of work or service we provide, but that does not mean that our clients or customers will agree to pay what we ask for all the time.

• Professionals should upgrade their skills. The skills of an individual is his bread and butter. If we do not improve our skills, we may gradually go down in our profession.

Difficulties of Earning in Business.

• In business, we invest money to earn money. If we invest money to setup a business for which we have no idea, we may not be able to develop our business properly. This could lead to financial crisis.

• Quality is the benchmark on which every business rely. If we do not maintain quality in our products or services, our business will not grow.

• We succeed in our business because of our customers. This is true for all businesses. If we do not maintain good relations with our customers, our business is bound to suffer.

No matter which occupation we undertake, there are bound to be difficulties and hardships. Some difficulties arise due to wrong selection of career or occupation. Some people select their occupation by following others. If we take up a job which is not meant for us, we invariably fail. To give an example, if a person wants to take up sports as a profession but is inactive physically, will he succeed? He can't. He may succeed if he has the determination to overcome his lethargy and put in the hard work.

How to Increase our Earnings?

This is an important question and the answer to this question vary among people for many reasons. Every individual has a different economic background. The need to earn is common in everybody but the opportunity and the source to earn differs. To increase our earnings, we should focus on the source of our income. It could be a job, a profession or business. These are the three categories of occupation.

JOB

A job gives us steady stream of income every month. We get salary from our job which is our source of earning. If we want to increase our income from salary, we have to increase our productivity. An employer hires skilful people to work for him. When an employee delivers the results which the employer expects, he becomes important for the company. Every employer wants to retain hard working, productive and efficient staff. They offer good emoluments to employees who stand up to their expectations.

An employee can increase his earnings in the following manner:

(1) By being regular in job: As salary is the income in a job and is based on attendance, an employee should take the maximum benefit of it by being regular in job. He or she should not reduce this income by being absent.

(2) By improving performance: Most companies provide a performance linked incentive. It is based on the targets an employee achieves for the month. If we work hard with dedication, we can achieve those targets and can earn money.

(3) By achieving targets: We should not get demoralised by big targets because it affects performance. We must overcome low performance through hard work and succeed in our job. Money will come if we put in our efforts the right way.

PROFESSION

A profession, on the other hand, is something which we select on our own. We can select any profession and earn any amount of money. In a profession, we market our skills. The more skilful we are, the greater will be the scope for earning.

A professional can increase his income by following means:

(1) By knowing the right source: A professional should know the exact source from where money will come. If we know the source from where we can get money, we can focus our attention on it to get the desired results.

(2) By developing positive attitude and aptitude: In any profession, the opportunity to earn is far more than in a job and it depends on the individual's attitude and aptitude. A professional should have good attitude and aptitude in equal measure. To succeed in any profession, we should work with passion and optimism. These are the prerequisite qualities needed in a professional.

BUSINESS

A business is, in some sense, similar to a profession. Business means self employment. We invest money to set up and run the business. Time is needed to set up a business and once it is done, we can earn money.

Profit in business comes through planning and proper execution of plan.

(1) By focusing on primary needs of a business: A businessman should focus his attention on the primary steps which has to be taken to start and run the business like getting licence for the business, arranging working capital, setting up an office, a shop or a factory, procuring raw materials, recruiting staff and arranging for advertisements.

(2) By ensuring quality of products and services: A businessman should ensure that his products and services are of a high quality. When people spend money to buy a product, they expect quality in it. A product or service becomes popular when it meets the safety and durability standards which are the basic benchmarks of quality.

(3) By ensuring customer satisfaction: Taking care of our customers is important to get the business going. Satisfied customers bring more business.

Generating income is not easy but it is not impossible either. The path towards financial security is filled with challenges which we have to overcome. A lot of determined hard work is needed to achieve anything in life. Success never comes all of a sudden. If it does, it must have a long history.

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The previous post was: An Introduction to Money Matters.

The next post is "About Savings".

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