In my opinion, there is a distinct difference between the words rich and wealthy. The popular notion is that being rich will take all of your problems away. Society tells us that to get to this point, we need quadruple our efforts to get there by working infinitely harder. That and only that will lead you to be rich. There is an underlying issue here unfortunately. As soon as the rich person stops doing whatever it is that made them rich, they have no more source of income. Also, they traded away a whole bunch of time for their money losing precious hours they could have spent with their family, reading a book, traveling, or anything else that makes life so great. You see, the biggest difference between being rich and wealthy is PASSIVE INCOME! In Robert Kiyosaki’s Rich Dad Poor Dad, he roughly states, “The rich don’t work for their money, they make money work for them”. This is the separator that allows for someone to experience true wealth instead of just riches. By having passive income from their money hard at work for them, time doesn’t have to be sacrificed to earn that money.
The mindset shift
At first, this concept may be a little difficult to grasp, however, if you listen to any of the most successful people in their industry tell you how they have gotten to where they are, it is through leveraging what they have built to other capable people. All of them start by being jacks of all trades, and little by little take themselves out of the equation. One of the best explanations of this principle comes from Tim Ferriss’s 4 Hour Workweek. Tim is a master at starting businesses up himself, and then leveraging other people to run his business for him. He primarily uses virtual assistants for almost all aspects of his businesses and explains tangibly how to do so. Shifting your mindset from the do-it-all person to the overseer may make you feel like you are doing something wrong. You are not, even if your subconscious is screaming that you are. Your brain is so used to thinking a certain way about time, work, and money that it will take time to break from this stigma. Once you understand that doing everything yourself is actually holding you back, it is next time to understand how to make money work for you.
Making money work for you
Most of the time, people spend their lives working for money when it’s money that should be working for them. Confused? Let me explain. When you go to work and put in hours to collect a paycheck, that is you working for the money you make, however, when you put something in an appreciating asset such as the stock market, money begins to work for you. The more you put into an asset like this, the harder the money works. If you keep reinvesting the return on your money, you will begin to do what is called “compounding growth”. What this means is your money is being multiplied as a result of the reinvestment of your gains. This is true for appreciating assets such as the stock market and real estate. Using these types of vehicles will give you consistent returns on your money without you having to sacrifice time to do so. This is how the wealthy are making money when they are sleeping, eating, working out, or anything in between. Someone who is wealthy can go about their daily life while their money works their theoretical job, pays the bills, and then helps fuel their passions. To paint a more vivid picture, remember what I said about trading time for money in a job that gives you a paycheck. Now swap out yourself with money and watch as money multiplies itself over and over and over again! Money isn’t human and doesn’t get tired, so it will always be working for you regardless of external factors.
How much money do I need to reach wealth and financial freedom?
The answer to this question is one only you can answer. How much money do you need to pay your bills and leave you enough extra to make you comfortable so that working and trading time for money becomes optional? This is the question you need to ask yourself on your road to wealth. Set goals for yourself to reach this number you have come up with. Learn to leverage out your work that you are trading time for money in as much as you can and put your assets into something that appreciates in value and provides returns with compound growth over time. This concept has been around forever, but it isn’t taught in school. You must learn discipline and break away from what you have been told about money and work your whole life by the system. Once you get past this, you will never look back. I am on a mission to reach wealth and buy my time back so I can do with it as I please. Financial freedom is one of the most noble and worthwhile goals you could have because it not only is a staple of what makes America so great, but it makes everyone’s lives around you better. Make the mindset shift and start implementing these principles today so you can start reaping the benefits of life.