5 Steps of the money machine (Focusing on #3)
Whether it comes to health, relationships, or money people you’re really on a path that has a high probability to end up well, completely fail, or put you somewhere struggling in between.
There’s a metaphor I often use about a man who jumps off of a high rise building as an experiment. As he passes each floor he waves to the people inside and says, “I’m doing great so far!” Of course, there’s the unfortunate splat at the end.
Many people generally fail to understand the inexorable and infallible law of the farm. The law of the farm states: “What and to the degree in which you sow today, determines what you reap tomorrow.”
In the case of poor lifestyle, as an example, the poor diet, bad spine, regular intake of medication, and lack of exercise does shows little negative problems today. Yet, these habits quietly steal from you and rob you of your future.
Your financial future works like your arteries. Where you have placed your money, purchases you have made, debt you have accumulated, how you run your business, cash flow levels all are a path that leads to long-term financial health or financial disease. Like the man jumping off the building, eating fast food and ineffective use of capital may seem like you’re doing OK so far, but there’s that inevitable crash at the end. It’s just straight-up physics.
A healthy path: The 5 steps of the money machine:
- Optimizes the function of the core business (CB) to maximize profit
- Develops additional business within that business (CWB) to augment profit
- Don’t just play the salary game, play the asset game
- Sets budget controls to manage consumption and protect investable profit
- Invests according to specific allocations and multiple streams of income like clockwork
I want to focus on #3 Accumulating Assets (Rather than spending on liabilities)
Liabilities are your car, home, jewelry, boat, toys, etc. If you’re going to increase your wealth, you make sure you’re buying assets rather than liabilities as much as possible. Assets increase your net worth and really good ones provide the cash flow to buy the things that you want. Too often, people buy what they want with their cash or credit and not from the cash flow of their assets.
Thus, as your economic machine produces money, the first thing you should not be thinking is I want to make a car upgrade, remodel the bathroom, or just buy a more expensive home. Cars and homes hemorrhage cash. The healthy path is that you purchase income-producing assets which provide the money for the nice jewelry, clothes, shoes, and car upgrade.
Income-producing assets are things such as another business, a business within your business (What we call “convergence”), real estate you can rent, the other 7 ways you can make money in real estate, stocks, cryptocurrencies, venture capital, participating in the gig economy, and many others.
Like with health, many people have trouble getting started. Yet, the faster you start taking care of yourself and investing, the sooner you have a habit, start experiencing positive changes, learn more, and it gets easier. Over time, there’s the opportunity for massive health and massive wealth.
There are actually colossal amounts of investments out there that can help you generate passive income. Educate yourself, seek professional help from the people doing it, and if you don’t have the money – there are many, many ways to get creative.
Have fun saving the world (and your future)
Dr. Ben
