MOB #3: Wealth Measured in Time Rather Than Dollars
One of the key concepts that I loved from the book “Rich Dad Poor Dad” was that of measuring wealth in terms of time. Here’s how it works.
Most of us are taught to look at a person’s “net worth”, as how much money they have
in the bank or in reserve.
But if you have a million dollars in the bank, are you wealthy at that point? Are you financially free? Not necessarily.
Let’s look at three different people and see who you would rather be.
Bob has a $10,000 in savings. He has $10,000 in monthly expenses, but no passive income. If he quit working today, he’d be broke in 1 month.
Mary has $2,500 in savings, $1,500 in monthly expenses and $1,400 in monthly passive income, money that comes in every month whether she works or not. If she quit working today, her expenses would be covered for over 2 years.
Kelly has $500 in savings, $3,000 in monthly expenses and $3,200 in passive income. She doesn’t have to work at all and she is fine.
So who is financially free? Who is really wealthy?
Obviously Kelly is the wealthy one here. You’ll notice that we didn’t look at the “stuff” that any of them have. Kelly may be driving a Mercedes Benz and living in a 5,000 square foot house, with a vacation cottage in the mountains. They’re all paid for.
The key is not to focus on the dollars in the bank, but to look at the difference in your passive income compared with your expenses.
The functional word in that sentence is PASSIVE. Money that comes in that you DON’T have to work for.
To be financially free, you MUST have passive income greater than your expenses. So how does a person that has little or nothing in savings acquire PASSIVE INCOME?
A wise man once said, “If you want to get rich, then help enough other people get what they want.”
It is about helping people get what they want by helping them find those that have what they want, and in a way that creates passive income streams (cash flows) for you. In the next section, you’re going to discover how to do this! First I want to show you a brief illustration of the power of this plan.