"No one has ever gotten rich earning their bread.
What factor of financial success do most people overlook? Charles Tipps, science editor at Quora and founder and CEO of TranZact, answered this question: "No one has ever gotten rich earning their bread. That's exactly what Charles was often told by his father.
But what does it mean to say that work doesn't make us rich? Well, according to you, how many of the legendary bad guys most people are so obsessed with work from call to call?
Of course, to become rich you will work hard, and the longer you work, the more likely you are to get what you want. As my father would say now, "There's nothing wrong with working for another person 8 hours a day. Work eight hours a day for yourself as well, and 12 hours a day on Saturday and Sunday." He has always followed this principle.
Selling time by the hour won't get you much. Human resources departments know how much a company has to pay a person an hour for the talents they require. Even if you have a prestigious law degree, work for a top firm in your industry, and can bill clients several hundred dollars per hour of your time, after deducting all expenses you will be very lucky to have at least a third of what you earn in your wallet. Even if you work your ass off, giving out 3,000 hours a year, you still won't make your way to riches.
So what do you need to know to achieve financial wealth?
First, you need to become simply rich, not financially rich.
Financial wealth refers only to money, and you need to understand that money is just a "parking lot" for the products you produce. Economics is built on the principle of exchange: you buy other people's goods for your goods. At the heart of all wealth is the principle of sharing land and production between different market participants. And money is simply a convenient means of payment for labor and goods.
So, here's what you need to know if you don't want to miss the turn that leads you to the intersection of Lexus Street and Big Money Boulevard.
Know what you're aiming for.
Having a large operating budget is not wealth. You can "turn around" millions of dollars a year, but it's only the income generated over those millions that makes you rich.
Typically, turning a lot of money around with little income leads to anxiety, because big and small houses of cards fall down equally fast.
Financial leverage
Your business partner says that he urgently needs 200 capacitors to keep his production line running smoothly. He is desperate and willing to pay $2 each. You have $100 and know where you can get those same capacitors for a dollar a piece. You can make money! Or you can borrow another $100 at 10% and almost triple your capital. Even better, you can force your business partner to pay it forward and get even more without risking your own financial resources.
Staff leverage.
Once upon a time, while I was still a salesman, I hired a window washer. The next day he came to us in a suit, took $20 in petty cash, and left an assistant to do his job. Soon I began to notice his other assistants in town, at least three.
I calculated his potential income. Now, this guy was making almost $120 an hour without much effort, at an average cost per worker hour of $21 (35 years ago). I was amazed that he was making four times as much as I was. And yet I was a partner in a thriving company in the retail business. At the same time, he had far less to worry about and staff!
Take advantage of all the opportunities available to you
The production cycle begins at the very moment when an enterprising person looks into the future and sees an opportunity there to make money. Just think how easy it would be to start your own window cleaning business. Then why do 99% of all window cleaners do their own work?
Understanding how to identify situations that can be turned into income generating opportunities depends on flair, and you still need to be able to develop it in yourself. Most people don't start their own business. The rest create their own workplace, where they will act as manager, secretary and marketer at the same time - a total of 4 positions in one, which is not an easy task.
Money must bring in money.
Do you remember how Mark Zuckerberg made $4 billion in one day? How did he do it? And how Jeff Bezos recently raised $6 billion in 20 minutes? Did they sit on the job longer than that? No, it's all stocks. And you work about 100,000 to 150,000 hours in your lifetime. Now multiply those hours by your rate of pay per hour and you get your level of potential wealth.
Money and stocks work 24 hours a day, 7 days a week, 365 days a year without any effort. The point is to live as frugally as possible, starting at a young age, denying yourself anything unnecessary and setting aside any extra money. By making your money work, you can generate income even while you sleep. You can eat out at a nice restaurant, making your money pay for your food while you eat out.
How did all this turn out for my father?
My father is 94 now, and he feels quite comfortable. In his old age, he's gotten a little rich. He had been gambling with real estate for a long time and in the 1960s he caught his luck by the tail. The new highway through Dallas was supposed to bring rapid growth to the suburbs. When I was 12, we moved to a small town where my dad made a big investment in a few blocks of a poor part of town at the intersection of two major roads. I remember how optimistic his mood was when he went about such a change in his life.
And then the expected growth began, only not in the old downtown area as his father had envisioned, but in the cattle pasture area on the other side of the new highway, which was land he might once have bought for $50 an acre (today it's worth almost $2 million). What's worse, when he realized he'd picked the wrong side of town, interest rates hit double digits, and that's too much to make anything. He ended up having to live 20 years of his life like a bug stuck in a glass of juice and unable to move. And that made him a very sad man.
One last lesson - you have to stop dedicating your life to trying to get rich. Risks and mistakes are inevitable. You can do everything perfectly right, making one nifty move after another, but you will still end up in a worse position than you were in the first place.
None of us are cut out for that kind of stress, tension, and uncertainty, and it makes working for other people for a steady paycheck a pretty good alternative.
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