The rich and successful stand out from the rest because of their Financial
Intelligence education, not their scholastic education. This is something
that we are not taught in school but rather something that is acquired. To
give you an example:
Is your home an
Asset or a Liability? The general consensus is that it is an Asset. But is
it?
To answer that question we must first understand the difference between
Asset and a Liability (financial intelligence).
Simply put: "An Asset puts money into our pockets." "A Liability takes
money out of our pockets." Knowing these two basic rules of financial
intelligence lets re-visit the question.
Is your home an Asset or a Liability?
1. Every month we make a mortgage payment - (Cash flows out).
2. We pay yearly taxes on our property - (Cash flows out).
3. We have to pay for repairs - (Cash flows out)
4. When the
mortgage is paid we still have to pay the other two - (Cash flows out)
As you can see, if you Buy a home, cash will always flow out of your
pocket. Thus your home is a Liability.
Does this mean that we shouldn't Buy a home? No, not at all. The point
that is being made is that if we wish to be rich (or wealthy if you are
uncomfortable with the word rich) and successful we need to understand how
to accurately distinguish Assets from Liabilities. Most people spend a
lifetime acquiring Liabilities rather than Acquiring income generating
Assets. The rich or wealthy spend a lifetime acquiring income-generating
assets and purchase liabilities that work for them instead of against
them.
An interesting fact and one that seems to be a stumbling
block for most people is that you don't need to be rich to acquire
income-generating assets. 80% of today's wealthy had nothing when they
started. The other 20% inherited their fortunes.
So, if you desire to be wealthy there are two basic things you have to
learn how to do:
1. Continually acquire income-generating assets (cash flows in). It does
not matter how small they are when you start. Over time assets will build
up.
2. Learn to acquire Liabilities that work in your favor and not against
you. "It's not how much money you make, its how much money you can keep
that counts. There is always hope for those that help themselves"