So many people these days are rushing back to university to acquire more knowledge to make more money. The only problem is that universities teaches you nothing about money, they give you a piece of paper to start right at the bottom and work your way up, eventually.
Universities teaches you knowledge and behaviour to be dependent on an employer for a paycheque where you earn money monthly and pay higher taxes all the time.
That’s not very practical, yet that’s what we pay for when going to university.
If you want to become financially independent, now or in the future, then you have to take a different route than the 95% of people that ends up either struggling every month to make ends meet or those being broke all the time after meeting their commitments.
The reality is, financial freedom is only possible when you can divorce your time from what you earn.
To illustrate how this works, let me start off with a simple definition of what income is:
Income = Hourly Rate x Time Worked
$25/hr x 8 hours = $200
So, let’s say your rate is $25 an hour. If you work 8 hours, you’ll get paid R200 per day.
Simple math, right? This calculates to +- $5000 per month!
Now, what do most people do when they want to increase their income?
Well, they increase their time of work. So, some people work more hours at their current job or they get a second job and work more hours that way.
The other way people try to increase their income is by increasing their rates.
This is the main reason some people try to get promoted, some pursue better careers, and others go on to earn a diploma or degree thinking that that’s what’s going to put more money in their pockets.
There’s nothing wrong with this type of thinking and that certainly works, and I am extremely happy for those people, but there’s a major drawback with these strategies – all they do is simply increase their hourly rates of pay which will come with time anyway.
But, there’s a smarter way to increase your income that isn’t taught in school or university and isn’t dependent on you trading your time for someone else’s Rands.
So, let’s talk about the difference.
Again, the first definition of income is based on your hourly rate multiplied by your time. But, a more enlightened definition of income is this, where income equals your hourly rate, multiplied by time, and then multiplied by leverage:
Income = Rate x Time x Leverage
Leverage is a term that’s often referred to in financial books, but it basically means doing a lot with a little to gain maximum advantage.
Robert Kiyosaki, author of the bestselling Rich Dad, Poor Dad series says, “Leverage is the reason some people become rich and others do not become rich.”
Now, there are basically 3 main types of leverage that you can capitalize on:
People Leverage
Financial Leverage
Knowledge Leverage
You might be familiar with these; but, when it comes to increasing your income, we find that most people aren’t utilizing any of these forms of leverage at all.
So, let me run through these to make sure that you’re clear about what I’m actually referring to here, starting with people leverage.
People Leverage
Let’s face it, we all have the same 24 hours in a day, but we can get a lot more accomplished by leveraging our time through the efforts of others. And, that also includes leveraging other people’s talents, skills, know-how and experience.
A perfect example of this is a business owner who leverages their time through their employees:
Income = Rate x Time x Leverage (employees)
This obviously gives them the ability to multiply their efforts and increase their income without necessarily increasing the amount of time they invest to grow their business.
The thing is, not everyone’s can be an entrepreneur. Not only that, but no matter how successful you become, as a business owner, you’re generally still part of the limited income equation.
Knowledge Leverage
This is normally where someone achieves a professional status like an engineer, lawyer or accountant where they charge others for their time and effort.
This is a very good start to wealth but again the professional is limited by his time as shown before and can only sell a maximum of 8 hours per day but at a high rate.
Financial Leverage
And, that leads us to financial leverage, which is all about using money as a tool.
Growing a business or becoming a professional is a good step in the right direction, but it doesn’t incorporate the most leveraged step, which is to use money (not work) to make more money.
But that said that is the reason why business people and professionals are growing rich is because they make the money and then use financial leverage to make it more! Think about Donald Trump, Bill Gates and Warren Buffet.
Because, the wealthy don’t work for money; they invest in assets including money and people, and assets produce cash flow, not a paycheque.
In the context of what we’re talking about here, it’s all about converting your available cash or even OPM (other people’s money) into income-producing streams that will pay you a return without working long hours.
Another example of how financial leverage works is how a typical investor uses it:
Income = Rate x Time x Leverage (money)
An investor leverages his or her money by investing in assets that produce passive cash flow. Of course, one of the most popular traditional assets to invest in is rental properties.
And, on average, the ROI (or, return on investment) for traditional real estate investments like these are gonna range about 5% to 8% per year.
However, after you factor in things like taxes and inflation, you’re net ROI is going to be more in the range of only about 2% to 3% per year.
There’s actually a whole universe of passive money-growing opportunities out there that are producing annual returns of 20, 30, 50%, and even more. But, at the end of the day, the wealthy increase their income, not by focusing on increasing their rates or time, but by increasing their leverage.
Once you really understand how leverage works, it can put you on the fast track to financial freedom. And again, true financial freedom is created when you can divorce your time from your knowledge and earning capacity.
If you’re working for someone else, you don’t have leveraged income because your employer is buying your time in order to build their dreams.
And, since time = life, you’re literally selling your life in 40-hour weekly chunks to a company that probably pays you less than you’re worth.
So, leverage helps you live your dream and avoid living someone else’s.
But, it really doesn’t matter whether you’ve got a job or you’re self-employed. Because, you’re either using leverage to your advantage, or you’re being leveraged by someone else, and you’re leaving money on the table.
It’s just that simple.
It all boils down to putting your money to work for you instead of just you working for your money and trading your time in exchange for income.
If you’re wondering how you can create leveraged income, and where do you start, then I invite you press the button at the bottom of this page to get more information and to know whether you qualify or not.
We will show and teach you how to start creating leveraged income and to use this concept of leveraging knowledge and money to the next level to create streams of positive cash flow.
What we will not be able to show you is to how make money very quickly as this is not a “get rich quick scheme.”
But with the skills that we will teach you, combined with your discipline and dedication, you will earn enough to take care of all your needs and have extra cash for savings and investment into further financial leverage. If you know what I mean!
Good Luck!!