Table of Contents
Who is working hard in your life? Is it you or your money? If it’s money, then enjoy your life. If it’s you, then transform your hard-earned money to work for you.
No question, working hard is important, but working hard alone will never make you rich. Look around the real world. There are millions—no, make that billions—of people who slave away, working hard all day and even all night long. Are they all rich? No! Are a lot of them rich? No! Most of them are broke or close to it. On the other hand, whom do you see lounging around the country clubs of the world? Who spends their afternoons playing golf, tennis, or sailing? Who spends their days shopping and their weeks vacationing? They are Rich people! So let’s get this straight: the idea that you have to work hard to get rich is bogus!
“Your economic security does not lie in your job; it lies in your own power to produce—to think, to learn, to create, to adapt. That’s true financial independence. It’s not having wealth; it’s having the power to produce wealth.” –Stephen Covey
There is one quote, which goes like “a dollar’s work for a dollar’s pay.” But it forgot to tell us what to do with that “dollar’s pay.” Knowing what to do with that dollar is where you move from hard work to smart work. Rich people can spend their days playing and relaxing because they work smart. They use leverage tools extensively. They employ other people to work for them and their money to work for them.
Work Energy to Money Energy
You have to work hard for your money. For rich people, however, this is a temporary situation. For poor people, it’s permanent. Rich people understand that “you” have to work hard until your “money” works hard enough to take your place. They understand that the more your money works, the less you will have to work.
Consider money as a form of energy. Most people put work energy in and get money energy out. People who achieve financial freedom have learned how to substitute their work energy with other forms of energy. These forms include other people’s work, business systems at work, or investment capital at work.
Each one of us has a goal to become “financially free” as quickly as possible. Definition of financial freedom is simple: it is the ability to live the lifestyle you desire without having to work or rely on anyone else for money. You become financially free when your passive income exceeds your expenses.
Harv Eker has identified two primary sources of passive income. The first is “money working for you.” This includes investment earnings from financial instruments such as stocks, bonds, money markets, mutual funds, as well as owning mortgages or other assets that appreciate in value and can be liquidated for cash.
The second major source of passive income is “business working for you.” This is a business where you do not need to be personally involved for that business to operate and yield an income. Examples include rental real estate; royalties from books, music, or software; licensing your ideas; becoming a franchisor; owning storage units; owning vending or other types of coin-operated machines; and network marketing, to name just a few. It also includes setting up any business under the sun that is systematized to work without you.
Why is Creating Passive Income Difficult?
Without passive income, you can never be free. But, and it’s a big but, did you know that most people have a tough time creating passive income? There are three reasons. First, conditioning. Most of us were actually programmed not to earn passive income. When you were somewhere between thirteen and sixteen years old and you needed money, what did your parents tell you? Did they say, “Well, go out there and earn some passive income?” Doubtful! Most of us heard, “Go to work,” “Go get a job,” or something to that effect. We were taught to “work” for money, making passive income abnormal for most of us.
Second, most of us were never taught how to earn passive income. In my school, Passive Income was another subject that was never offered. Since we didn’t learn about creating passive income structures in school, we learned it elsewhere, right? Doubtful. The end result is that most of us don’t know much about it, and therefore don’t do much about it.
Finally, since we were never exposed to or taught about passive income and investing, we have never given it much attention. We have largely based our career and business choices on generating working income. If you understood from an early age that a primary financial goal was to create passive income, wouldn’t you reconsider some of those career choices?
Unfortunately, almost everyone has a money blueprint that is set for earning working income and against earning passive income.
Long-Term & Short-Term Thinking
Rich people focus & think long-term. They balance their spending on enjoyment today with investing for freedom tomorrow. Poor people focus & think short-term. They run their lives on immediate gratification. Poor people use the excuse “How can I think about tomorrow when I can barely survive today?” The problem is that, eventually, tomorrow will become today; if you haven’t taken care of today’s problem, you’ll be saying the same thing again tomorrow too.
To increase your wealth, you either have to earn more or live on less. Nobody is putting a gun to your head telling you the house you have to live in, the kind of car you have to drive, the clothes you have to wear, or the food you have to eat. You have the power to make choices. It’s a matter of priorities. Poor people choose now, rich people choose balance.
Again, the idea is to have your money work as hard for you as you do for it, and that means you have to save and invest rather than make it your mission in life to spend it all. It’s almost funny: rich people have a lot of money and spend a little, while poor people have a little money and spend a lot. Rich people buy assets, things that will likely go up in value. Poor people buy expenses, things that will definitely go down in value. Rich people collect land. Poor people collect bills.
Create Freedom Fighters
I have shared my own experience of real estate investment with many people. Just “buy real estate, especially land.” It’s best if you can purchase property that can produce positive cash flow, but as far as I’m concerned, any real estate is better than no real estate. Sure, real estate has its ups and downs, but in the end, be it five, ten, twenty, or thirty years from now, you can bet it will be worth a heck of a lot more than it is today, and it could be all you need to get rich. As the saying goes, “Don’t wait to buy real estate, buy real estate and wait.”
While poor people see a dollar/rupee as a dollar/rupee to trade for something they want right now, rich people see every dollar/rupee as a “seed” that can be planted to earn a hundred more dollars/rupees, which can then be replanted to earn a thousand more dollars/rupees. Think about it. Every dollar/rupee you spend today may actually cost you a hundred dollars/rupees tomorrow. Consider each of your dollars/rupees to be investment “soldiers,” and their mission is “freedom.”.
(Excerpt is inspired from book “Secrets of the Millionaire Mind” by Harv Eker.)
