How To Master The Law Of Compensation

The Law Of Compensation

“It is one of the most beautiful compensations of this life that no person can sincerely try to help another without helping him or herself. Serve and you shall be served. If you love and serve people, you cannot, by any hiding or stratagem, escape the remuneration”. ~ Ralph Waldo Emerson

The Law of Compensation decrees that you will always be compensated commensurate to your contribution. In effect you reap what you sow. Your rewards will always be in direct proportion to the service you render to others.

What You Put In, You Get Out


This law is often referred to as the ‘Law of Reciprocity’ because when you put something out it comes right back in other ways. In effect people will always reciprocate in kind for whatever you do too and for them. You can see this in action when someone does something for you, you feel compelled to do something for them. This accentuates the point that the ‘Law of Compensation’ is already enshrined in our human DNA.

As Zig Zigglar puts it ‘you can have anything you want in life if you just help enough people to get what they want’. Effectively this is the doctrine for wealth creation. Put differently whatever you put in, you get out. Put a lot in, you get a lot out. Put a little in, you get a little out. Put nothing in, you get nothing out. The Lottery uses a great marketing slogan to accentuate this point: ‘If You’re Not In, You Can’t Win’. Well that is true across the full spectrum of life activities.

In fact this rule of compensation is unbreakable. That is why people are foolish to fall for all these ‘get rich quick’ schemes. You can never put a little in and get a lot out. The only people making money from get rich quick schemes are those that create them. They put the time in, they get a lot out.

You Can Never Put A Little In & Get Alot Out

Likewise don’t waste your time playing the lottery. Not only have you a better chance of being struck by lightening, but the ‘Law of Compensation’ will likely take back anything you win. Statistically most Lottery winners are right back to where they started within 3 years. They obtained a lot of money by putting very little in, therefore the ‘Law of Compensation’ took it right back. They simply didn’t ‘put in the time and effort’ to develop a mindset conducive to wealth creation and retention. This is only acquired though hard craft. In effect you only get out, what you put in.


Reap Today What You’ve Sown Yesterday

In fact The ‘Law of Compensation’ is a sub law of the ‘Law of Sowing and Reaping’. In effect you cannot reap great fortunes, unless you have sown great deeds in advance. Put differently whatever you are reaping today is a measure of what you have sown in the past. If you want to reap something substantial in the future, you have to sow something substantial in the present.

You Get EXACTLY What You SOW

People are forever cursing the circumstances’ they find themselves in today, without realizing they’re getting exactly what they sowed in the past. In effect the Universe delivers exactly what you have ordered. The Universe does not mind how big your order is, it just cares that you are willing to put in the effort up front. The ‘Law of Compensation’ always rewards you today commensurate to the deeds you have sown in the past. In that context your future prosperity is entirely dependent on what you are doing today.


The Longer You Input The Greater You Output

However a word of warning. You need to guard yourself against frustration if you are working diligently and still waiting for success to show. As Emerson said ‘the longer you put in without getting out, the greater will be your return when it finally comes’.


Critical Considerations

Perhaps Earl Nightingale said it best when he said ‘The amount of money or good you receive is going to be in direct ratio to: the need for what you do, your ability to do it and the difficulty there will be in replacing you’.


Is There A Need For What You Do?

So really think inside the framework of Earl’s definition. Is there a need for what you do? Are people willing to pay you for your efforts expended? The golden law of Entrepreneurship is find a need and fill it. The bigger the need, the greater the compensation. The fastest way to find a need is to find a ‘problem’ and provide the ‘solution’ to that ‘problem’.

Everybody is looking for solutions to their problems. They will happily compensate you if you help them to solve their problems. In effect all fortunes begin with the sale of personal services. If you wish to increase the size of your rewards you must increase the quality and quantity of your service.

How Well Do You Do What You Do?

Secondly how well do you do what you do? The problem is most people contribute just enough to survive. The reason most people get average results is average performance. They do enough to just get by, and as a result they get enough to just get by. You have to realize that if you want to get more out, then you have to put more in. You have to contribute substantial time and energy up front if you want to gain substantial compensation there after.

I’ve said it before and I’ll say it again: ‘you sow in one season, you reap in another. You never sow and reap in the same season’. You simply must be willing to do all the work up front, with the expectation that the compensation is coming down the tracks.


How Difficult Would It Be To Replace You?

Thirdly how difficult would it be to replace you at the work you do? Average people are easily replaced because average people are easy to find. Conversely if you are exceptional at what you do, then you are difficult to replace. If you are difficult to replace then you command far higher compensation. In order to become exceptional in your field you need to commit to excellence in everything you do. You need to look for ways to add value and exceed the expectations of others.


Everything You Do Has An Opportunity Cost

You also need to realize that the ‘Law of Compensation’ embodies an opportunity cost. As Emerson postulated; “For everything you have missed, you have gained something else; and for everything you gain, you lose something else.” What you need to realize is that we cannot have successes without failures or hardships without gains.

In effect your priorities in life determine the polarity of you compensation. Those that put work ahead of family will gain success in monetary terms, but often lose their family. Those that drink and smoke to excess gain friends and enjoyment, but often lose their health. Those that eat a high fat diet gain the enjoyment of tasty food, but often lose their lives. Those that get up early to go to the gym lose sleep but gain fitness. The Law of Compensation triggers a perpetual cycle of gain and loss. You need to be careful so that which you gain, is greater than that which you lose.


Different Systems Of Compensation

Our modern ‘system of compensation’ includes: trading time for money, trading money for time or trading money for money. Virtually every form of monetary compensation we receive is attributed to these three routes.


Trade Time For Money


The vast majority of people trade time for money. They work for a wage that compensates them a pre-determined dollar value per hour worked. The size of that wage is determined by the need for what they do, how well they do it and the difficultly in replacing them. The problem is that this form of compensation is always limited by time. Considering one is paid by the hour and there are just 24 hours in a day, then there is always a ceiling on the amount of money that can be earned.

The Law of Compensation states that every loss has its gain so in this context you are losing time but gaining money. The effects are multiplied if you choose to work for yourself. You need to put in considerably more time up front with little if any compensation. However time will trigger the ‘Law of Compensation’ and you will receive compensation commensurate to all the time invested.


Trade Money For Time


The second way to trigger compensation is to trade money for time. You can buy other people’s time by compensating them for their efforts. In this context you could outsource tasks for which you lack adequate competencies. The ‘Law of Compensation’ states that every loss has its gain so in this context you are losing money but gaining time.


Trade Money For Money


The third way to trigger compensation is to trade money for money. You can invest in assets that generate passive income. In this context you could invest in stocks or real estate and generate residual income in the form of ‘dividends’, rental income and capital appreciation. The benefit to this form of compensation is that you can replicate it as often as you like, thus there is no ceiling on your earning potential. The ‘Law of Compensation’ states that every loss has it’s gain so in this context you are losing money up front but potentially gaining considerably more in the longer term.


SMART People Use Leveraged Assets


The smart play is to employ ‘leverage’ to induce a multiplier effect on the compensation you receive. Regardless what you do you will need to initiate the process by trading time for money. However the smart play is to focus your time on creating leveraged assets. So save 9 months worth of living expenses from your current wage-paying job. This gives you the security and the peace of mind to change direction. All the while be working on the side to create a ‘leveraged asset’.

A leveraged asset could include: building a business, writing a book, creating a mailing list, investing in a franchise, developing a software service or anything else that has the inbuilt ability to generate multiple streams of passive income. When you have 9 months worth of living expenses saved from your job, leave your job to focus on completing and launching your ‘leveraged asset’.

Not all leveraged assets are created equal. Books provide royalties, which flow ad infinitum without further input from you. A business on the other hand will require continual input from you.

You should in turn take the funds generated by your leveraged assets and invest them in stocks or real estate. This tactic maximizes leverage because you are no longer trading time for money but instead making money work for you. However I must make a Disclaimer here. You do so at your own risk. Investing in the stock market or in real estate is a form of speculation. You reduce the risks by doing your own due diligence and by seeking counsel from proven experts in these fields. If you don’t take the time to do comprehensive due diligence and to get expert advice, then you will lose your money.


How Compensation Applies To Your Life

Before I close out this lesson I need you to understand that the ‘Law of Compensation’ does not refer exclusively to money. On the contrary. It applies to everything in life. In effect you sow a pain to reap a gain, or you sow a gain to reap a pain. Allow me to elaborate further.

So if you ‘sow a pain to reap a gain’ you might be doing the following:

• The pain might be denying yourself TV time to spend the time writing that book you always wanted to write, the gain is all those royalty checks you are going to earn for the rest of your life.

• The pain might be denying yourself that new car today so that you can buy a rental property instead; the gain is the passive income that will flow forever more.

• The pain might be pulling and straining muscles in the gym, the gain would be developing a toned physique that boosts your self-esteem.

Conversely lets consider a few examples for ‘sowing a gain, reaping a pain’.

• The gain might be the high you get from taking illegal substances; the pain might be the damage it’s doing to your health.

• The gain might be the confidence you get from drinking alcohol; the pain would be the hangover you get the next day.

• The gain might be the pleasure you get from driving a new car, the pain would be the monthly repayments.

In this context you should always consider the pain/gain ratio when determining any course of action.


Final Thoughts


The Law Of Compensation is one of the most important laws you can learn because it unlocks all that ‘green energy’ that we call ‘money’.  Most people are ignorant of the ‘Law of Compensation’ and so they spend their lives working hard for very little gain.  Those that understand the Law of Compensation work SMARTER not HARDER.  Leveraging the principles in this lesson will enable you to live financially free for the rest of your life.

If you are serious about living financially FREE then I invite you to checkout PeakSoft – the ultimate success software.  It has an entire module dedicated to ‘wealth creation’.


Author: Martin

Martin O' Flynn is the the founder of and - the Breakthrough Life Management App.