The real tragedy is that the lack of early financial education is what creates the risk faced by average middle-class people. The reason they have to play it safe is because their financial positions are tenuous at best. Their balance sheets are not balanced. Instead, they are loaded with liabilities and have no real assets that generate income. Typically, their only source of income is their paycheck. Their livelihood becomes entirely dependent on their employer. So when genuine “deals of a lifetime” come along, these people can’t take advantage of them because they are working so hard, are taxed to the max, and are loaded with debt.Rich Dad Poor Dad
“Their only source of income is their paycheck.” See, I told myself at the beginning of last year that THAT would change. However, had to purchase a visa and suffered some heavy losses throughout the year based on bad decisions and partnering up with someone who lengthen the liabilities list.
This is why I don’t all my eggs in the same basket. I have sources of income coming from everywhere.
Example, student who I had taught for maybe 8 months no longer works for me. Is that a huge hit? No. Something else must fill it in. Another client who was BIG TIME ended up disappearing on me and that would’ve been a substantial amount of income. Well, I never got the income in my pocket, so is it a loss? NO.
But again, this is all income. Assets are still at a minimal, and that’s why I’m committed to assets this year.
As an employee who is also a homeowner, your working efforts are generally as follows:
The problem with simply working harder is that each of these three levels takes a greater share of your increased efforts. You need to learn how to have your increased efforts benefit you and your family directly.
Once you have decided to concentrate on minding your own business—focusing your efforts on acquiring assets instead of a bigger paycheck—how do you set your goals? Most people must keep their job and rely on their wages to fund their acquisition of assets.
As their assets grow, how do they measure the extent of their success? When does someone know that they are rich, that they have wealth?