Everywhere you turn today, you hear people lamenting the income gap between the top 10% of earners and the bottom 50%, or below.
Those people are half right. There is a big difference between those who earn the most and those who just barely get by. But, as we will discuss in detail later, it is not a gap but a pyramid, something else much easier to manage. The reality is that anyone who learns the skills they need and develops the mindset of the wealthy and not the poor can create wealth and never have to work again.
But first, let’s look at what will not work: a better job or a raise will not get you there. Think about it.
In the US, to join the top 10%, you need an income of about $250,000/year. That is the equivalent of a salary of $125/hour. The average family income for those who work for a salary is about 10% of that.
There just aren’t that many jobs like that.
And, any job you have can be gone tomorrow.
So what will work?
There is a sign in Malibu, where I live, that says, “One good investment is worth a lifetime of toil”. That is absolutely true.
To create real financial security, what you need is to create Wealth.
A job is not Wealth. A job is just income that can be gone tomorrow.
Wealth means that you have created investment assets that will work for you 24 hours a day. Wealth will provide for your retirement, help launch a career for your children, or fund a charity you love. If you build Wealth, having “a better job” will never matter to you again.
But how do you start if you don’t already have money?
To create Wealth, you need assets to invest.
But, cash is not the only asset. Skills are also an asset.
So forget about just getting a better job. A job--even a very good one—can be gone tomorrow. Instead, look at any job as an opportunity to learn skills and turn them into assets. A job is a tool—nothing more. It is a tool to help build Wealth and Financial Freedom.
There are two basic ways to convert skills to assets
Seek Ownership Opportunities. Whenever possible, find jobs where some equity in the business is part of the pay package. Most of the new billionaires that you read about did not start the company that made them rich; they joined it when it was young and took part of their pay in equity. Steve Ballmer, who is a billionaire and just bought a basketball team in Los Angeles, started out by going to work for a little start-up company called Microsoft. In the beginning, there were some risks, but he undoubtedly knew that he had the skills to try again if the first company failed.
Use OPM. That is just an abbreviation for “Other People’s Money”, and it is what you can attract if you develop skills that other people either do not have or do not have the time to use. I have a friend who just a few years ago suffered the complete collapse of the business he was in through no fault of his own. In less that 5 years he has built a new business in a field he was never in before that provides him a nice house, college tuition for his children and expensive vacations for his family. The secret was two things: he had developed skills that could be used anywhere (which we have talked about, and he knew he would need money for his new business and used the skills of language and persuasion that we have also talked about to convince other people with lesser or different skills, but who had money, to invest with him. He has made himself rich and his investors richer.
I built my wealth the same way and anyone with marketable skills can do it—so develop those skills!