Building Wealth - Make Money Online

This is a rather broad question, but it is central to understanding the tone, format, and purpose of this lens. Some of the following thoughts may have entered your mind:

• How can I become wealthy?
• I want to be rich!
• I don't want to work at my dead-end job anymore.
• I never seem to have enough money.
• What is the secret to success?

These thoughts are also most likely what brought you here. The answers to your questions or problems start in shifting the way you think about wealth.

I myself stumbled onto this answer when I wasn't really expecting it. I've had the goal of becoming a millionaire ever since I was a little child, and I've been looking for ways of achieving my goal ever since. One day my father handed me a flyer to this free real estate/money making weekend seminar. I decided to go.

Early in the first day of the seminar, the speaker posed us a challenge. He asked us to write down the definition of the "wealth ratio" on a piece of paper in front of us. Now, I had never heard of the wealth ratio before, but I always figured myself to be a rather astute individual. After all, I AM a computer engineer with a minor in management and computer science! So I sat there thinking, "ok, a ratio is just one quantity divided by another quantity… and it's supposed to be about wealth". What is wealth? Well here's what I put down:

Cash Inflow / Cash Outflow

There! See? If you make more money than you are spending, i.e. cash inflow > cash outflow, the ratio is greater than 1, so you're wealthy. Makes sense to me! Well here's what the speaker said the CORRECT answer was:

Passive Income / Expenses

Well it seems I was pretty close, but why did he put the word passive down? Isn't active income going to be just as good? Money is money right? I completely disagreed with the speaker at first, almost instilling enough courage to flat out ask him about my confusion. Instead, he went on to explain in greater detail and my thoughts about wealth really began to transform.

Here's the thing, how long would you be able to sustain your current style of living if you stopped earning your active income? For most people this means quitting your job, which is usually their only source of income. I'm sure you've heard all of those statistics like "most American families have less than $10k in savings for retirement", etc. But imagine if you had passive income streams that exceeded your expenses? You would immediately have all the free time in the world, and no money problems. That is the true key to wealth! Make Wealth Ratio = (Passive Income / Expenses) > 1.

Don't think of being rich as just becoming a millionaire. There are many people with extremely large salaries that still have to work all day, every day, or else they would be broke in a very short period of time. These include doctors, lawyers, and engineers (oh no!). Practically everybody in the middle class have very similar wealth ratios. In other words, a doctor can have the same wealth ratio as a janitor. How can this be? Well yes the doctor has a higher salary, but most of the middle class tend to increase their expenses at the same rate their salaries go up. This means buying a slightly bigger house, a nicer car, more clothing, fancier restaurants, etc. They're never able to get ahead, and most end up relying upon mutual funds or social security.

There is a better way. Work on improving your wealth ratio, and you can do it in two very different ways. Increase your passive income AND lower your expenses. You can achieve passive income in many ways, the most popular being business, real estate, investments, royalties, network marketing, and more. Reducing your expenses may be a hard pill to swallow. There are varying degrees to which this can be done, but take notice that you don't have to live frugally forever. The overall goal is to free up as much available cash as possible for various opportunities or investments, use leverage and the power of compounding (I will write more about this later). You will be able to exponentially grow your money to a point in which you can retire extremely wealthy, a multi-millionaire, and then live the high life.

This sacrifice can be done with in a much shorter timeframe than traditionally working at some job for 45 years or more. This can be done, and has been done by many people. It may even seem obvious to you, but how many people actually do this? 5% at best. Exploring, learning, and understanding this concept and the implications that follow will make you very wealthy in a relatively short period of time.

I hope this has helped you as much as it has helped me.