As you know, one of the most important keys to creating wealth is the right attitude. In Series #22 we spoke about how the wealthy focus on output or value versus input or effort.
In this series today we will talk about how the wealthy focus on how to have their money work for them instead of them working for money.
When I was in my 30’s I had to work for money, and it did not seem like there was enough to set aside and save or invest after making a house payment, paying bills and raising a family. For about a year I paid myself first $300 per month from my $3000 per month income, and after 10 months saved $3000.
Then I completed my tax return and owed $3000 to the IRS. That was so discouraging that I stopped paying myself first for another eight years until I re-read The Richest Man in Babylon. Paying myself first was really the key to creating wealth.
Now my money works for me, instead of me working for money. Here is how you can have money working for you instead of you working for money:
Example #1: In 2001, I purchased a tri-plex with my wife and her real estate partner. My $18,000 down payment grew to $130,000 in six years while the tenants paid down the mortgage and the other expenses with their rent payments. This was money working for me at about 40% compounded annually.
Example #2: Several years ago we refinanced our house at 3% and invested the money with a private lender and earned 7%. That allows us to make our loan payments and provides a profit of $670 per month. Our money is working for us.
Example #3: Recently I met a couple of young ladies creating a short-term rental business. They were profitable and wanted to grow. Loaning them money at 8% interest is helping them grow, and has money working for me.
There are many businesses that are profitable and can grow faster with more money. Until you pay yourself first or create an account for saving and investing, you will not be able to take advantage of those opportunities and have your money work for you.
What opportunities have you seen, or currently see, where your money can work for you, instead you just working for money?
In the next article of the series, we will talk about how there no such thing as a lack of time; only a lack of priorities.
To your prosperity,