As I mentioned in my previous post, Robert’s book “Retire Young Retire Rich” was a book that totally reshaped my financial thinking as well as my perspective of life in general.
It was like you have this hard knock to your head that totally shattered your lifelong conception of money and how to earn it. Suddenly, I could see why I was struggling to earn money, even though I am already in the upper middle class section of society. I was earning good money, but the expenses were high and I could not safely say that I could quit my job and life will go on as normal.
The first key lesson that I got from Robert’s book was "Leverage". Basically, leverage is anything smaller that can achieve anything much larger. In fact the whole book focusses on leverage. Leverage of the mind, leverage of the your plan, leverage of your actions and leverage of your first step.
Robert’s Rich Dad said that “Cash flow is the most important word in the world of money” and he continued to say that “The second most important word is Leverage”. In fact, leverage is the reason why less than 5 percent of all people are rich. These people are rich precisely because they know how to use the power of leverage and most people don’t.
I was indeed struck by this concept of leverage. Leverage is indeed power. For example, how long would you take to save $100,000 dollars ? Assuming you can save $1000 per month, it will still take you 100 months or 8.3 years. Most people though will have difficulty putting away $1000 per month in spare cash. How then could you be able to afford big investments if you are just depending on your ability to save ? How can you be rich by just saving money ? The answer is leverage. You use other people’s money ( OPM ) such as the bank’s money to make investment in the form of risk-managed debt instruments. More of this in later posts.
But the biggest leverage that I learned from Robert is leverage of the mind. That was lesson 1 for me. Isn’t it amazing how often we hear the words “I cannot afford it”, “I can’t do that”, “I don’t have the money” and “Investing is risky” ? What all these do is limit the scope of your mind and switching off your thinking caps. If you said you can’t afford it, the brain takes it as final and end of story. It will not think about it anymore.
However, if you say “How can I afford it ?”, it becomes a challenge to the brain. You put your mind to work looking at ways to afford it. Great inventions were made possible because humans refused to accept that something was not possible. The Wright Brothers would not have invented the aeroplane if they accept that humans cannot fly. Humans need to be challenged and they excel when challenged. Unfortunately, a lot of people take the easy way out and accept that they cannot afford it because it is easier to do so.
Hence, always be aware of what you say to your mind. Be aware of words that limits your possibilities. Be aware of other people’s words that make you feel small. Be aware of your thoughts that diminish your potential.
That my friend, is the first step in your journey towards meeting your “Retire Young Retire Rich”’s goal ...
To Your Success
Wingcent Ning
Success-Biz Marketing
wingcent@gmail/com
http://mysignaturebusiness.blogspot.com
Singapore
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