The Difference Between Earning Money and Making Money

We all love to have money. The more we have, the more toys and gadgets we can buy. We can save more money for our retirement savings account. But earning money, and making money, can actually be two different things.

If you’re working towards a goal to being able to retire early, you may benefit from learning about the differences between earning and making money. And of course, you want to learn about how to make money legally.

Earning money can mean money that you have gotten from an employer, in exchange for your labor. It may also mean money that you’ve made while working in your business. Earning money always involves trading in your time and energy, to earn an hourly rate, or a monthly salary. Your employer is paying you, in exchange for your time. If you don’t put in the time, you don’t get paid.

Earning money always makes you dependent on your employer, whether they’re a business, or government agency. The time and energy you put into it are considered finite resources. You can only do so much, before you burn out.

When earning money, you are also paid once, for those two weeks of work you put in on the last paycheck.

Making money can virtually involve almost every other method. Making money is when you use your own ingenuity to create something, but that it can potentially earn you income over and over again, with minimum effort.

It can be as simple as having money in a savings or retirement savings account, that accumulates interest over time.

It may mean making rental income on a house, condo, or room you rent out in your home. You may make income from renting out a parking or storage spot, if you own a condominium.

Making money may involve certain creative endeavors. If you’re written a short story, or book, you can earn royalties from the sales of your written words, or income from the amount of downloads. Writing jingles for radio, or acting on a TV show or commercial, will continue to earn you passive income.

If you’re interested in investment portfolios, you can invest in dividend-producing stocks, or other types of mutual funds that earn bonuses.

These are all avenues of income where you set it up once, and then they earn you income over time, for minimum maintenance.

These types of income may also be known as passive, yet that term may not necessarily be the best. Even these types of income may involve some maintenance on your part. A rental property may need some upkeep. Investment portfolios may need to be rolled over.

And why is it so important to learn the difference between earning money, and making money? Because ultimately, you may wish to give up your job, and start making money. Making money that will require little effort on your part. If you’re smart about it, you won’t have to wait until your 65, to start making money.



Elisabeth Donati is the owner of Creative Wealth Intl., LLL, creator of Camp Millionaire, Moving Out! for Teens, The Money Game, Celebrating Women and Wealth and several other financial education programs, products and services. She was the recipient of the 2010 Financial Educator of the Year Award from the National Financial Educators Council. She is known as The Financial Literacy Lady.She is author of The Money Jars: Your Magical Money Management System, The Ultimate Allowance, and co-author of Rocks to Riches for kids. Her blog, Financial Wisdom with a TWI$T, is a great place to start learning to think differently about money and investing.

Elisabeth is an expert in teaching the basic financial principles people need in a way that is engaging, empowering and fun. For information, visit or or call 805-957-1024.

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