Wealth Creation is not something that is taught in any college or educational institute. The focus is always on skill development and seldom does someone tell you at an early age what to do with the money you earn. It is always left to the individual to figure out what to do with the money they earn and even worse is that most people do not even ever think of more than one source of income throughout their lives. In this post I would like to share some insights on some key aspects of wealth creation and I hope readers will be able to understand how important it is to create wealth from an early age.
Lets start with some facts and I cannot ignore the great businessman who wrote “Rich Dad, Poor Dad”-Robert Kiyosaki when I share this. Understanding the cash flow quadrant is the first step:
Here are some stark realities:
97% (I will call them the “Ordinary”)of people in the world are employed in an organization or self-employed and earn active income, which means the income stops when they stop working.
3% are businessmen or investors ( I will call them the “Masters”)who have active as well as passive income which essentially means that they create a system that provides them sustained income even when they stop working.
The 3% people mentioned above also hold more than 90% of all wealth available. What a disparity!!!!
It is important people realize this and start moving to the 3% quadrant. For this to happen there are some key things to be aware of about the mindset of the 3% group:
- Ordinary men think that their job is their security and they work for security. They are instinctive and do not use their power of discrimination to make rational decisions. The Masters meanwhile take that extra calculated risk in their lives and look to achieve freedom from a life long struggle to create wealth. They essentially look for financial freedom.
- Ordinary men only think of making more and more money while the Masters create wealth. Being wealthy is the ability to have time and money to realize your dreams and lead the lifestyle of your choice. It has nothing to directly do with the amount of money one has.
- Ordinary men need instant gratification for whatever they do. The Masters are ready to pay the price over the short term to become financially independent for the long term. This is called delayed gratification.
- Ordinary men use their won time and skill to make a living while the masters leverage their time and skills and also duplicate themselves (leverage time and skills of others) to create a system that works for them for a very very long time.
- Ordinary men think of the process and the content to reach their goals while the Masters believe in purpose or context to achieve their dreams.
Having understood the difference in mindset of the Ordinary vs the Masters it is also important to know some facts about your money/wealth:
- Assets are things that put money into your pocket while liabilities take money away from you. A house you stay in is a liability while it becomes an asset when you rent it.
- Always create one asset for each liability you own.
- Savings are different from investments. Savings are money you kept aside in safe zones like deposits, mutual funds, bonds etc from what you have earned while investments are the price you pay in units of time or money into education, equities or setting up your own venture. Investments are more risky in nature but a great bet to create wealth in a shorter period of time and sustain it for the rest of your life.
- Always have multiple sources of income if you can. One source is always very risky.
- The lifestyle you choose should last you your lifetime. It should only get better with time and not the other way.
Finally there is no great life can be selfish. Go out there and help others who are less privileged to get to your level and higher financially, intellectually and spiritually.
So step out there and think of your next investment!!!!!Become a Master and a Champion of people!!!!!!!