In making money it used to be simple. The rules for making money used to be:
- Go to school
- Get a job
- Work hard
- Buy a house
- Live within your means
- Get out of debt
- Have a diversified investment portfolio
- Retire and enjoy the government pension
Here is what you need to know:
- Get knowledgeable on money. Assets can rise and fall but it is knowledge that will make money for you. Similarly a lack of knowledge will keep you poor. Making money will always elude you.
- Make debt your friend. Most people are concerned about debt. they think that debt can hinder you in making money. But there are good and bad debts. A good debt is one against an income producing asset like a mortgage on a property you rent out in return for an income. Bad debt on the other hand would be the debt on a credit card. Good debt can make you rich while bad debt will certainly keep you poor.
- Cashflow control is critical. You need to learn how to have more money coming into your accounts than going out. Simple but effective. Making money centers around having more incoming cashflow.
- Be a boy scout – always prepare for bad times. Most baby boomers have only ever known good times. Many have not been prepared for our current financial crisis and are suffering now. By being prepared for bad times; you’ll always enjoy good times.
- Make money at the speed of light. Most people work in a model that is financially unsound. They are part time earners but full time spenders. You need to adopt a model where your money is working 24/7. When you sleep; you make money and when you are awake, you also make money. The power of leverage of time or time zones is critical for this to be effective.