After reading a recently viral article entitled "Li Ka-Shing teaches you how to buy a car & house in 5 years", I started to wonder why some people earn more than others. My conclusion is that the more equipped a person is in offering and finding value, the easier it is for him or her to extract money out of the society and economy.

1. Incremental value to employers

A friend of mine shared this statement on LinkedIn recently: "If your company is paying you $1, you had better provide $2 of value back to the company". He was referring to the increasingly competitive employment landscape, with foreign talent easily accessible, and technology replacing humans.

However, this is easier said than done. It is typically only the revenue generating or "front office" jobs which allow an individual to offer incremental value, by increasing their employers' topline. The middle and back office while important, are cost centers which eat into a company's bottom line. It is very difficult to offer incremental value to employers in such roles, which often see compensation stagnant after a number of years.

2. Incremental value to society

Only a handful of people are fortunate enough to graduate from the right schools, to start accumulating relevant work experience in a front office role at an early age. Entrepreneurship offers an alternate path to income generation, and it is comforting to see entrepreneurship an increasing trend in Singapore, especially among the young.

While building a sustainable business is more demanding than seeking employment, its returns can be limitless through constant innovation. This explains why almost everyone on the Forbes Singapore league table is an entrepreneur. Some Singaporeans earn more than others because they are offering products or services which add value to society and get compensated handsomely for it.

3. Better income allocation

How we allocate the income earned from either employment or entrepreneurship is a significant pillar of our earning potential as well. Li Ka Shing recommends this formula:

He allocates a full quartile to investment, which also includes savings. Investing is the only means to have money work for you, which in turn offers additional income. Some methods which Singaporeans employ to grow their income are fixed deposits, property investment, stocks investment and forex trading.

A value perspective

Adopting a value perspective can help you earn more. For example, instead of looking for a higher paying job, one can think from the perspective of "how can I offer more value to my prospective employer?"

Rather than brainstorming which business to start, one can think, "what's the best value I can offer to society and prospective customers?"

Last but not least, with reference to the money we have, how do we then get the most "bang for the buck?"