Regardless of what you may have been told, hard work alone does not make you rich, nor does it give you financial freedom. It's how you think about money and how you acquire it that makes all the difference. Most people put things in terms of learning and spending, focusing on how much they are making in the now and acquire things sooner rather than later. In sum, they're working to meet expenses but expenses tend to rise as soon as salary does.
The path to having infinite wealth and financial freedom lies in a totally different direction. You have to ask yourself, what do entrepreneurs and other hugely successful people do that the other 95% of Americans do not? The answer is that they think about finances in terms of cash flow and know how to generate passive income that will continue indefinitely.
As best-selling author Robert Kiyosaki ("Rich Man, Poor Man") has explained, part of the problem is the way most individuals have been taught to define source of income, assets and liabilities. Traditional perceptions absorb annual income is basically finite, comes from your job or professional career and is earned by doing. Money is valued for what it can buy today or how much of it can be amassed.
Additional people have been trained by society and general accounting practices to classify houses, cars, luxury items and general "doodads" as assets based on their paper value. As a result, the rule of thumb says bigger, better and more are always desirable. In reality, though, these things are actual liabilities because of the costs associated with them; when you consider general maintenance, real estate taxes, insurance, etc., you see that large and luxury possessions can deplet cash flow significantly. No wonder that, on average, people in the Middle Class lose 50% of their gross income to taxes.
Worse still, following this traditional mindset can be disastrous since since it leads to living a month to month regardless of how much comes in. Roughly 60% of Americans could not last more than 60 days without a paycheck and retirement, even for professionals (like doctors) because impossible because of current cash flow needs.
The solution lies in learning to value time over money and generating enough passive income to cover months or years without having to physically earn it. Start by living well within your current means; it is easier to be financially free when you have lower expenses. This will allow you to accumulate enough to leave the rat race for a life of fast track investing.
Then put the money you're not spending into things that have a continuing return on investment (ROI) like rental real estate, network / multi-level marketing or a business that provides a necessity (and where employees and managers can extremely generate passive income for you). Keep in mind that, as we've seen, stocks and other paper investments are subject to the whims of Wall Street.
Be prepared to work very hard in the beginning and acquire additional passive-income generating assets before liabilities. Consider finding a mentor and approach him or her with the intent of giving something in return for the valuable information and experience you'll be getting. No one should be asked for "something for nothing" or feel that he or she is being taken advantage of.
In terms of real estate, for example, this might mean doing the renovations for a relatively small amount of money while you're learning by doing and listening to great advice. Many budding entrepreneurs make the mistake of asking for help and offering profits on the back end. Think of an old-fashioned potbellied stove and remember that you have to donate the wood before the stove can generate heat.
Lastly, remember to provide true value, give all of yourself and be generous; you'll find that the more you give the more that's left for you. That includes spreading the wealth by teaching others what you've learned.
In sum, learning to think differently about the acquiring and spending of money will put you on the fast track to having true financial freedom.
Source by Raymond Aaron