1 Decide That You Will Never Be Poor Again.
1 Decide That You Will Never Be Poor Again.
I know it’s easy to brush this off as something trivial, but it isn’t.
Every time you have to make a decision, ask yourself:
“Will this make me poor or will it make me rich?”
And if there isn’t a clear way that your decision will lead to an increase in income, then it’s a liability.
This is why this process is hard for some people.
Financial success is basically choosing long term over the short term!
I know it feels great when people notice you doing well, but you know what feels even better? Not ever having to worry about money ever again.
Once you make the decision and start going towards this goal, it’s just a matter of moving forward until you get it.
2 Break D
own Your Situation Into What’s Making You Money and What Is Costing You Money
You got out of poverty and now you’re doing way better than anyone’s expectations. In their eyes you are a success and you think you can slow down.
I said it last time and I’ll say it again: you didn’t come this far just to come this far!
Yes, celebrate because you are putting food on a table that previously didn’t have any, now it’s time to make sure there will always be food when you need it.
Once again, break every financial aspect of your life down:
But split them into 2: What costs me money & What makes me money
This is a good time to also add the money numbers next to it.
In terms of what makes you money, this is where you add your job or your business. Write down how much you earn per month and an estimate to what you earn per year next to it.
Add here any other revenue stream you have. Maybe you’re getting some benefits, royalties, rent and so on. Put them in this column.
Once you’re done with what’s making you money, it’s time to break down what’s costing you.
The house you live in goes here. If you’re renting it’s obvious that it’s costing you money, but also if you simply live in it: you’re paying for utilities, maintenance etc. figure out how much living in your house is costing you.
Do the same for your car, your subscriptions – these include health and medical insurance, your hobbies and more.
The most important one to look for is DEBT. How much debt do you have?
Write it all down and then take a step back and look at the list.
Your goal now is to bring those numbers on the left down and increase the numbers on the right. Simple right? Let’s see how we can make that happen.
3 Close Down the Money Pits
On every list there are a couple of things that are costing you way too much money – at least for the return you’re getting.
These are your immediate focus. Everything you do now is focused on ridding yourself of money pits such as debt. Be careful to not create new ones in the process.
There are two ways to have more money at the end of the month than you currently have:
- Is to increase your income and maintain your expenses the same – resulting in you having more money left after expenses
- Cutting your expenses
In order to never be poor again, you will actually be required to do both.
This is why you’re only going to go after the money pits, those where you feel like your life would be better if you didn’t have these recurring payments taking all the fun out of life.
A common mistake people make is that they believe cutting out a coffee or clipping coupons or showering less will make them rich because they’re saving a little bit of money..
A penny saved isn’t a penny earned… it’s just a penny!
& Nobody gets wealthy saving pennies!
Every time you close down a money pit you are immediately richer because of it.
Close down the money pits and don’t bother yourself with the rest. Once you’ve got that done it’s time to make the switch.
4 Focus Exclusively on Increasing Income
From this point on, all your efforts are about bringing in more money.
Figure out who’s got your money!
Figure out how you can get some of it!
And repeat.
Fundamentally, there are 3 ways to increase your income:
- VOLUME: increase the volume of work. – this one got you out of poverty, but since you have only 24 hours in a day and can’t use them all to work (nor should you by the way), this will not make you rich long term. Repeat after me: As long as you’re trading time for money you will never be rich!
- SPECIALIZATION: this means you are able to provide the service or product you’re currently selling for a higher price because the quality of the outcome is higher. This allows you to charge more money. It’s a great step that gets long term results. Repeat after me: The more you learn, the more you earn!
- HORIZONTAL: this is where you attach other products or services to your current offer in order to maximize the amount of money you bring in from each customer. That’s why every car wash is also selling you, car scents.
As long as you’re disciplined and have your expenses under control, the threat of poverty is just a money problem. You know what solves money problems? That’s right: MONEY!
Sales solves everything!
Sell more, charge more and you’re on your way up!
5 Incorporate
When things are rolling it’s time to become a business.
Don’t fear the bureaucracy or the unknown elements of setting up an llc or a corporation.
These days everything can be done online. You’ll be up and running in no time.
The biggest lie you’ve been told growing up was that people get rich by working high-paying jobs!
NO! This was never the case!
In order to be wealthy you need to own things that increase in value over time!
Like a business, property, parts of other people’s businesses, bitcoin and so on.
Incorporating allows you to do just that: to own a business.
Businesses are treated differently than individuals, they have different rules that are in place to help them keep more and more money so that they grow.
The business is a different entity than you are and as we found out when we discussed business structures, Businesses get rich quicker than individuals!
Because you own the rich business, you’re also rich.
Almost all wealthy individuals out there don’t have their fortunes in stacks of money lying around in their home, they’re not playing Instagram-pretend games, instead they own businesses that are worth fortunes in themselves.
If there’s enough demand for it, at some point we’d like to do a course that walks you step-by-step through everything you need in order to incorporate a business in the US from anywhere in the world and even curate some services that help you get everything done smoothly, but we’ll see.
6 Pay Yourself First
Here’s where things get counter-intuitive for most:
Poor people pay their bills first, rich people pay themselves first!
The thing about the poor people’s process, is that they pay the bills and never get to paying themselves anything.
You’re not meant to just pay bills until you die right?!
This is where having a business really becomes valuable. With businesses being taxed differently, you can afford to pay yourself first and have additional capital.
You become a deductible expense and the business takes care of the bills for you.
This money should immediately go towards investments of any sort. We strongly recommend you automate the process so that money leaves your personal account automatically.
Personally, it goes to our index funds and crypto investments. This is what they mean when you hear others say have your wealth creation on auto-pilot.
The thing is, you can never do this unless you pay yourself first. Bills will eat away at your money and you’ll never have anything left in your account.
7 Acquire, Create or Build Your First Asset That Makes Money While You Sleep
If you’ve done everything on this list right, you should be positioned in such a way that you can finally begin the asset building process.
The easiest one is real-estate.
Uneducated people think real-estate is expensive.
Why? Because they always think about expensive homes or expensive buildings and just how much money they think they would need to buy it.
In reality, you only need 20% of the money a house is worth to buy it. Once it’s yours you can immediately rent it out. If you’re smart you can clean it up and have the rental income go up.
Once you find a good tenant, the house will start making you money every month.
But real-estate isn’t the only cash flowing asset. Publishing a book does the same thing. When people buy it, a portion of the money goes to you. Stocks that pay dividends to the same but on a smaller degree. An ecommerce store can take orders and bring in money for you while you sleep.
If you go to Websites4sale.tech a business I own, before the day is over you could have an ecommerce store set up and running. Everything you need to own a store is there and I’ve made it easy for you to do so.
8 Use Your Work Money to Improve and Solidify the Income Generating Assets
By this point you probably managed to have a steady flow of income from your work as well as your first cash flow generating asset.
A common mistake people make is that they try to diversify too early. Instead of putting all that money towards starting a third business, take a portion of your investment and see just how much more value you can extract from your asset.
If it’s real-estate, fix the roof or the windows, new paint, fix the garden… you know what to do to drive the rent up.
For an ecommerce store, it’s better design, better ads, better content.
Invest money in your cash flow generating asset to a point where it becomes a solid investment; only then can you move on to something else.
Do not spread yourself too thin!
I’ve seen people screw up million dollar businesses because they got distracted by a new shiny opportunity and forgot to take care of the thing that was putting food on the table. Don’t make the same mistake as they did!
9 Save Money by Investing in Easy to Liquidate Assets That Also Increase in Value
You’re here because you’re looking to never be poor again right?
A crucial part of this process is learning to save money. I know savings are a very sexy topic indeed, but rich people do it differently. They don’t think about this money as savings, you’re not saving money for a rainy day – that’s what poor people do.
You need to do what rich people do: they build an OPPORTUNITY FUND
This is money they are saving for -your guess is on point- opportunities.
This distinction right here is why the rich keep getting richer and the poor poorer.
Lets say a great opportunity presents itself. Opportunities don’t care who you are, they just … are.
Poor people have no money saved up, so they can’t make use of the opportunity. Because of that, their financial status remains the same.
Rich people on the other hand have the opportunity fund ready to go. When the opportunity presents itself, there they are ready to play.
Repeat this process a couple of times and you’ll never be poor again.
Don’t think the opportunity fund consists of a Nike shoe box where you throw in every $5 bill you get.. No. Even that money is parked in stocks through easy to liquidate brokers like Robinhood, Revolut, eToro and so on. Why? Because: Your money should always be making babies!
Don’t allow your money to sit, it will get bored with you and go to someone else who knows how to keep it moving.
10 Make Investing in Yourself a Priority
All progress in your life up to this point is because you were learning something of value, either from someone who was doing it before or in the traditional way through trial and error.
You’re consuming this piece of content right now because you are taking the process of investing in yourself seriously.
But this is not enough. We know plenty of people who all they do is read books and attend conferences, yet they are not making any real progress.
In order to make progress you need to “INVEST” in yourself. The word invest means you have TO SPEND.
Usually one of 3 things: TIME, EFFORT & MONEY. Most likely, you’ll need to invest all 3.
If you’re looking to improve the quality of your work, you will need better tools, these cost money and you’ll be scared that they won’t pay off. Once you buy them, you will need to spend time and effort learning how to leverage them to be more productive.
It’s the same with specialized knowledge. I’m giving all these fundamental principles away for free so you don’t have to pay for them and they will serve you well your entire life. But maybe the problem you’re facing requires specialized knowledge, or you’re simply looking to accelerate your process… that’s when you trade money for know-how.
That’s when you buy the better tool. Or when you enroll yourself in a course that gets you up and running.
Remember: Your life is cheap because you think investing in yourself is expensive!
11 Your Effort Pays for Assets and the Assets Pay for Your Pleasure
Everything you earn outside of survival should go to assets.
A common mistake that’s keeping people poor is that even if they somehow manage to come into money, they consume it.. They buy food, toys, clothes, TVs or go on holidays when they shouldn’t.
Here’s a highly valuable lesson for you:
Just because you have the money, doesn’t mean you can afford it!
Read that again and take a moment to think about it until you actually understand it.
You’re playing the long game right? Here’s how the rich do it:
Instead of drinking champagne now and that be the last time you ever drink champagne, the rich drink water now, until they can afford to drink champagne anytime they want.
Every time you want to buy something for your pleasure ask yourself:
Am I buying this with my time, or are my assets paying for it?
If your assets aren’t making enough money to cover the cost of your desire, you can’t afford it and you should get back to work!
The only exchange that makes sense in the long run is to trade your time for assets, until you no longer have to.
12 Find Opportunities That Pay for Themselves
Poor people don’t know this, but there are plenty of opportunities that pay for themselves.
I know someone who’s first investment was a townhouse. He was looking for a place to rent and saw that the entire building he was about to was put for sale. Because he had good credit – something we discussed last Sunday – he was able to go to the bank and secure a loan with a minimum down payment. He moved into the new building and rented out the other apartments.
His tenants are paying the mortgage for the entire building and then some. He now has additional money, lives rent-free and every month he’s building equity in the building.
But this point does not apply exclusively to real-estate.
If you buy a new camera and you can use it to shoot photos for clients, it’s just a matter of time until the camera pays for itself, from that point forward the camera generates additional income.
Always look for opportunities that pay for themselves!
13 Reinvest All Your Profits to Accelerate Wealth Creation
At this point you’re already doing well.
One of our personal secrets to growth has been consistently reinvesting out money into our businesses. If you’re young you don’t need much, you don’t have many dependencies relying on you, so you can afford the luxury of reinvesting everything to give you a shot at wealth.
The more you reinvest, the quicker you’ll reach that point of financial stability.
What’s even better, in most countries, you don’t have to pay taxes if you are reinvesting profit, which means, if you reinvest the money in the business you get the financial benefits of your profit in its entirety without the state taking anything away from you.
That’s why amazon isn’t paying any tax. All the money they’re making get’s reinvested or billed as an expense.
As a corporation you get taxed on what’s left when you subtract expenses from revenue. If these two are equal, meaning all the money is spent, there isn’t anything left to pay tax on.
This is also why most expensive cars you see are not owned by individuals, instead these are leased by the company these individuals own.
It’s all money-chess, so you better learn the rules and how to play it.
14 Do Not Improve Your Lifestyle in Proportion to Your Earnings
This is the biggest reason why people who are out of poverty go back to it.
Fight the urge to play status games! Although you can afford it, there’s no need to flex. We know your inner child is screaming to show them haters just how well you’re doing and how you’ve proved them wrong, but a victory isn’t final until the war is over, so don’t screw this up.
Continue to live below your means – considerably below your means, assuming you are now a person of means.
Set rewards for yourself if you hit certain milestones. Even today, if something costs 5% of what we’re earning, we still set a target to increase our income by at least 10% before we buy it.
That way even after we purchase it, things are still on the positive growth path for us.
It’s easy to sabotage yourself by improving your lifestyle. Don’t fall in this trap, play the long game, play to win!
15 Repeat Everything Until Your Assets Out Earn Your Spending 3 To 1
It usually takes 3 years to go from poverty into the middle class if you commit to it.
It then takes 7 years to go from mediocrity to financial freedom.
Where financial freedom means you could stop working tomorrow and you could live off the work you’ve done for the rest of your life.
People always expect things to move quicker than this, but for us 7 years is a drop in the bucket.
Do not be enamored by the illusion of get rich quick schemes or the fast-forward version Hollywood presents.
Building wealth sustainably is a fairly boring process.
At least in terms of day to day. You have 1 or 2 big events per year and the rest is just consistent effort.
Do the right things for long enough and you will eventually get yours!
The retirement you’re looking for has nothing to do with age, it has to do with freedom from money problems.
Think of the ideal family life, you own a house, 2 cars, go on a couple of holidays, your kids education is complete as well as your health and hobbies. What if your assets were making 3 times as much money as your ideal life costs per year?
All that additional capital would go to supporting the things you love or even more assets to safeguard your children’s future.
Even if something critical happened where your expenses would double because of an unforeseen event, you would still have enough money to be able to weather the storm.
And that is what freedom is, that’s when you know you’ll never be broke or poor again.