Significance Ratio

Yo! Karthi, 167 years 🤯are you kidding me?

What happened to all the interest and stuff? you may ask (though no one asked me yet).

yeah yeah interest must be included…we will come there. I should have said, if you kept your savings under the pillow or something, LOL :)

167 years was a little harsh, I get it. It is still 30 years with compounding taken into account. But at least the 9th wonder (compounding) is there for us to make use of so let us be thankful to that phenomenon. To just grab your attention to compounding I had to do some drama. Now that I have the attention, let us talk about earn more principle.

My point is, the rate at which you are earning is not enough for financial independence and we need to increase the earning (actively and/or passively). Whether it is employment or entrepreneurship, the value your offer is directly proportional to your earnings. One principle that helped me get my head around this is significance ratio.

Significance Ratio = earnings (over a period)/value produced(in limited time)

Your earnings will be directly proportional to your significance ratio. You build it once and if it keeps giving you earnings would be a significant work. Are you doing that today?

This is where typically employment fails because the trade is between limited time and mediocre skills for money. Because time is a limited resource, it naturally curbs the money flow during employment. If you want to go in the direction of Sundar Pichai’s of the world, then the game is significance.

I had to figure out this principle the hard way. I focused on money to attain financial independence. I was wrong.

All that matters is significance. The earnings will compound over a period of time once your value multiples and creates significance. See what skills you have today (or can build now) that will allow you to enhance your significance ratio. Work with inputs and not with outcomes. Work with value and not money. Your financial independence will be inevitable.