Pay Yourself First

Everyone has 3 ways they can produce value for someone else to earn compensation or money.(Money is just a way to account for the transmission of value from one entity to another)

 Leverage Time for Money

• Hourly Employee
• Contract labor
• Self Employed 

Leverage Knowledge/Skill-Set for Money 

• Mentor, Coach, Advisor
• Blog, Subscription site, Video content
• Salary Employee(CEO, CFO, ect.)
• Royalties on a book, music, or patent
• Niche or Highly Skilled Labor

Leverage Money to Make more Money

• Loan money to earn Interest
• Invest in a Stock or Private Equity
• Buy cash flow assets like Real-estate 
• Buy/own a profitable Business 

When people are “younger”(less than 25-27 years old) the majority of people have not mastered any skills yet, nor do you have enough Capital to leverage to create value for others.

What they do have to leverage, however is A Lot of time and Energy!

For young people this can be very difficult with the pressure from their parents and peers to go to college, rack up student l9sn debt,, and buy other liabilities to look as if they fit into social standards, or keep up with their friends. 

However, if you can live on less than $2000 per month during this period, and work for a good mentor/someone who has the life you want to live, then you can learn their trade or skills from them. 

I suggest to anyone in this age group to forgo college unless it’s to become a doctor, lawyer, or some other high paid profession and your parents or scholarships are footing the bill. Student loan debt is the absolute worst choice any young adult can make. You will owe it for the rest of your life, even if you file bankruptcy, and all it gets you in most cases is a piece of paper the real world doesn’t care about at this point anyway.

 Anyone that can live on significantly less than what they earn, while learning a niche or highly valuable skill, will set themselves up to become financially free. 

This can be done at any age, but will become harder the older you become.

Especially if you’ve acquired a lot of liabilities such as- student loan debt, credit card debt, a mortgage on the home you live in, financed vehicles you drive yourself, or have dependents. 

You’re not out of the game if you are in this category, but you will have to get creative or trade MORE of your time than someone else to accomplish the same amount.

Once you have learned the skills from working for someone else who’s accomplished what you’d like to, or you have paid for them(as discussed in the other section of this chapter)

You’re then able to leverage your knowledge  along with your time to significantly increase your income to a point where you can live on 1/10th of what you make.

That is when you should start investing into assets that will pay you passive income. 

It should only take 3-5years at this income level for you to amass enough Capital and assets that you’ll no longer have to trade your time for money. 

3-5 years investing $300-500k per year into the right assets based on where we are in the wealth cycle(described in chapter 4) will generate $100-500k in passive annual income. 

If you can maintain low living expenses(less than $4-6/month), this will give you far more than double your living expenses in passive income. Making you completely financially free, and giving you the ability to do whatever you want with your time, knowledge, and money.