The wisdom and tools to acquire wealth can be found all over the world. Mentors, books, articles- so many tools are available to you if you open your mind and receive them. However, it is not enough to just become aware of this knowledge you must take steps to actively incorporate them into your life and review them over and over again. These timeless principles can be found in financial literature from “The Richest Man in Babylon” to Robert Kiyosaki’s “Rich Dad, Poor Dad.”
The most basic principle found in the lessons of most mentors is the idea of “paying yourself first.” This means that before you pay your mortgage, your car bill, buy yourself anything- you use your paycheck to pay yourself. This is done by making sure that 10% of every paycheck you save. The reason you save your money, is if you get your paycheck and immediately buy something with it, you have paid a retailer first and not yourself. You worked for your money- make sure you reap the rewards. Another common misunderstanding people have about this concept is that by saving money to buy a house they are paying themselves first, believing that all homes are assets. Unfortunately for them, a personal residence is not an asset. It doesn’t put money in your pocket- it takes money away from you in the form of your mortgage and repairs. Although putting money in a 401k is generally in line with this thought process, it doesn’t always work out that way. 401ks may be used to invest in stocks that could lose value, or be drawn down early.
So we know that to pay ourselves first we must save 10% of our income, but it is also a good idea to invest 10%, and give 10% to charity. If your money is just sitting in a bank account, even with interest it will lose value over time due to inflation. Although living off 70% of your income may seem like a struggle at first, you’ll be surprised to find how easy it is to adjust when you really believe that’s all you have. One of the most profitable ways to generate wealth is through passive income from real estate investing. Rental property that cash flows every month from rent checks will allow you to build wealth outside of your regular income.