Invest in Assets

It does not matter how much money you make; it matters what you do with it. If you want to get ahead financially, you have to spend less than you earn and invest the difference in assets.

When you think of assets, you think primarily of money. This is good, but it isn’t enough. You are not only spending money. You are also spending time and effort. Everything has a cost, and where you put your time, money and effort will determine how much of a return you get. So, put your time, money and effort into those things that make your life better, reduce obstacles and give you new opportunities. Put your money into assets.

What are assets? Assets are anything that decreases your expenses and increases your income. They can also be something that stores wealth without losing it. If it becomes less valuable over time, it isn’t an asset. If it doesn’t make you any money and only increases your expenses (time, money, effort), it isn’t an asset.

If you are renting a house that is $1,000 per month and you can buy a house that ends up being $800, then by buying a house you’ve saved $200 per month.

If you rent that same house out for $1,000 and pay $800 for mortgage and maintenance, then you have $200 more money coming in each month.

If you get a new skill that lets you earn $10,000 more per year, then the time, effort and money that you spent on obtaining that skill paid off. That skill is an asset.

If you put money in an IRA that grows at 6% annually on average, then that is an asset that stores wealth and builds it.

If you move to an identical apartment 30 minutes closer to where you work, then the proximity of your apartment has produced a savings in time.

Assets are important because assets make your life better. So, look around and start to think “what is it that I could do to make my life better, reduce my expense of time, money and energy AND increase the time, money and energy that I have.”

By thinking this way, you will be more open to spotting opportunities that can increase the quality of your life.

Who do you work for?

How many times have you been asked, “Who do you work for?”

Unless you haven’t graduated from high school yet, my guess is that you have heard that question at least once in your lifetime. It is a common question that people use to engage in small talk and it is an easy way to start to know someone.

If you are like most people, you probably answered by giving the name of your employer. That’s not a bad answer since it is the truth, but it isn’t the whole truth.

In reality, you work for yourself. You may have decided to sell your own personal services to one employer in exchange for a certain degree of comfort, experience, benefits, money, position, time off and other things, but you still are selling your services. Someone who is self-employed may sell their own personal services to many buyers, whereas you sell your personal services to one buyer. In effect, both the self-employed and the employee work for themselves. Each sells their own services.

While you may be employed by someone else, you should consider the work that you do as a service that you sell to your employer.

… but, why should you care?

You should care because when you think of your employment as “selling your services” instead of “being employed” you can look at all of the gains that your employer offers in exchange for your services. When you “sell your services,” you find a way to make work profitable for you. When you are “employed” you get only what the employer tells you that you can have. That small distinction creates a vastly different outcome.

I find that most people who work as employees will judge their success by their title or by their compensation. These are good things, but there is more to the equation.

How does a business sell their services profitably? They do two primary things. They try to reduce the cost of selling their product or service and they try to increase the price and quantity of services sold. In other words, the business wants more total money coming in and less of anything that goes out (time, labor, capital, etc.)

You should do what the employer does, not what most employees do. You want to work towards situations where you spend less time and effort in a position AND are paid better. Being paid more is good, but working a lot more for it is not that good. Working less is good, but not when you lose most of your income.

Why is the phrase “to work towards” in the last paragraph? Well, you cannot make changes to your employment instantly. In some cases you might, such as finding a better job, but if you are with one employer, it may take a while to position yourself for a promotion or apply for a better paying position. It may take time to create a work environment that benefits the employer but isn’t so stressful or time consuming. It may take time to become a person at work who everyone looks up to.

Some things do take time, but there may also be opportunities available now that you are passing up. You might have an opportunity to configure a desk, office or cube to be more private and comfortable. You might have the opportunity to get your employer to pay for education that you are not taking advantage of. You might pay for additional education on your own, so that you can sell higher quality services to your current employer. You might have the opportunity to take on a new project that will result in comparably less stress and less demands on your time. You might have the opportunity to take on new work that positions you for an increase in compensation. You might be able to change your start time and shave 20 minutes from your daily commute.

When you understand that you work for yourself, your success becomes a function of you. When you believe you work for the employer, your success is largely controlled by the employer and what the employer tells you you can have. So, look for ways to improve your knowledge and experience, increase your comfort, decrease your time and effort AND increase your compensation. That is gainful employment.

Practical Advice is Hard to Find

It is very hard to find good information. It is not hard to find people who mean well and want to help. It is not hard to find people who have been successful. It is not hard to find opinions. What is hard to find is good information that is useful and can answer the question of “How do I…?”

Some information is person specific. If you find yourself wanting to start a business and ask a business owner how they got started—hoping to glean some useful information that might point you in the right direction—you might hear a story that you know was unique to the business owner’s life circumstances. If you discover only that the business owner inherited their business or that their employer wanted to retire and asked them to buy it, you cannot really plan to replicate what they did. This kind of information is not bad, but it is not useful.

Other information is too general. Look up “how to start a business” online and you will find advice such as “get an idea, make a business plan and talk to a bank.” That, also, is not the kind of targeted information that you need.

I am willing to speculate that the kind of answer to “how do I start a business” is more along the lines of “how do I generate an idea for a business product or service when I don’t have any ideas?” than it is “how do I incorporate?” Yes, incorporation should be considered, but the real question of “how do I start a business?” is concerned with the major actions that enable discovery of a marketable product or service, the production of that product or service and the profitability and control of that product or service.

To give two more examples of focused questions, it probably also is something like “how do I look at my own life to determine what kind of idea I can turn into a real product or service that I, with my own skills, abilities, finances and connections, can make profitable?” Another real world question would be “how do I find the resources and information that I need to be successful in my business?” These are the kinds of real world questions that you would want to focus on, because to answer these would be to discover the real answers to “how do I start a business?”

The reason for this blog, and for the books, videos and other content that I have produced, is that I have searched intensely for information throughout my life. I have found many answers, but I have also spent a lot of time searching. What I hope to share are the answers and the how-to of searching for the information you need, so that you will not have to search as much, and for as long, as I have.

The questions are always different, but the method is always similar. When I ask “How do I…?” what I really want to know is

  1. How broad is the topic and how do I focus on what I need to know? (i.e. in dance, how much do I really need to learn?)
  2. What are the major areas that concern this pursuit? (i.e. in real estate, how to screen tenants, how to price units, how to determine what to do to a property and what not to so that it is profitable)
  3. Where do I find the resources, people and information necessary to help me answer the question? (i.e. instructors, agents, advisors, contractors, associations, books, etc.)
  4. What changes do I need to make in my life to enable me to pursue something?

Using these four previous questions as a rough guide, here are some of the questions that I have answered for myself:

“How do I build a good life for myself?”
“How do I learn to invest in real estate?”
“How do I make new friends?”
“How do I get a job in my field?”
“How do I climb the corporate ladder?”
“How do I learn to dance?”
“How do I overcome social anxiety?”
“How do I eat to lose weight and control my weight?”
“How do I find good information for my health?”
“How do I overcome weaknesses in my life?”
“What kind of business could I get into?”
“How should I think in order to find the best answers to problems?”
“How can I find answers to problems when I need them?”

There have been so many times throughout my life that I have gone in search of good information and found my resources lacking. I did not have someone who could give me good advice and I could not find the information readily available. I hate to say that I reinvented the wheel, but sometimes, when you cannot find what you are looking for, you need to reinvent the wheel. So, whether you ultimately come to this site for how to select high quality tenants, how to build wealth or how to dance anywhere, I hope that you will see not only information that is focused enough to answer your question of “How do I…?” but also delivered in a way that respects your time. Respect for the amount of time it takes to learn something is very important to me, and I try not to duplicate content or to add filler.