How to Make Money Forever

So far we have learned three important habits of the rich: paying
yourself first, having your money work for you, and working for
yourself. Now, we move on to the fourth habit.

Being fluent in the language of money

Money has its own language, much like a country has its own. In the
world of finance, there is a language. It is commonly called
accounting, but when people hear “accounting” they have all kinds of
stigmas associated with it. They think of a quiet person in a room by
himself playing with numbers. While this may be what an accountant
it, it is not what we mean by accounting. If you want to know how to make money, you will learn accounting

Accounting truly is the language of money. It is an art, and it is
simply recording what happens to money. There have been many
improvements in accounting over the years; it has evolved from a
single column system with income and balance sheet statements to a
double entry system with cash flow statements. Now, we can more
accurately say, “So, where did the money go?”

Accounting, as the language of money, requires practice to become
fluent in. Accounting, when learned, provides one with the necessary
tools to understand the stories behind the writings that deal with
money. These writings are often known as financial statements; they
are the stories of money. They explain what has happened to the money
and other assets. If one can understand accounting, then one can
accurately read the story. Then, and only then, can one make a
judgement about the quality of the story; is it good, or is it bad?
When one wants to invest in a rental property, he or she can look at
the financial statements, read them, and know whether it is a good or
bad story. If it is good (the property makes money), then it should
end up being a wise investment. If it is bad (the property loses
money), then it will probably end up being a bad investment.

This is why the rich become fluent in accounting. It is so they can
read and understand systems of money, and they can know whether the
system is performing well or not. In fact, they use it on their own
systems, too! Reading a financial statement, if one is fluent in
accounting, is the equivalent of using X-ray vision. You can read
right into the heart of the company. In this way, an entrepreneur
knows if his company is performing well or nto, and often he can tlel
where the problems are, if there are any.

So, if you want to be rich, become very fluent in accounting. You
will be able to understand what happens to money from then on.

Work for yourself

We now move on to the third habit of the rich: working for yourself.  This is very similar to the second habit of making your money work for you, but it is different enough to be called its own habit.  There are many people who make their money work for them but fail to work for themselves.  These people get a little bit richer, but not substantially.
Working for yourself is just as it sounds.  You don’t work for somebody else.   However, this is where the disconnect happens.  Many who “work for themselves” actually work for other people; they just don’t realize it.  For example, an accountant who runs his own private firm would be considered by commoners as “working for himself.”  However, to the rich, he is not working for himself; he is working for other people.  Why?

Working on your own is not the same thing as working for yourself

Suppose I am building a business.  I need this and that done; one of those things is my financial statements.  My financial statements need to be prepared and looked over, and I need somebody to represent me in event of an audit.  So, I hire an accountant.  My business is a large system; it is a machine that runs and continually pumps out money for me.  It would be producing more money, but it does not have one of the gears that it needs in order to do so, the accountant gear.  So, like I said before, I hire an accountant.  Now, I have a choice.  I can hire an accountant as an employee and pay him permanently a salary, or I can hire a private accountant; they both will work, as they both do the task that I need to be completed.  Either accountant does the same thing.  One is my employee, and the other is “working for himself.”  But, they’re both really working for me.  The private-firm accountant is still exchanging his labor for my money.  He’s in my money-machine, making me money.

In this example, it is easy to see how working on your own can be working for somebody else.

Working for yourself

When you work for yourself, you are building your own cash machine.  For instance, in this previous example, suppose I did not have enough money to hire an accountant, so I decide to do the statements myself.  This is me working for myself.  I am not working hard in somebody else’s moneymaker; I am working hard in my moneymaker.

So, you see.  Working for yourself is not the same as working on your own.  Working for yourself is critical if you want to be rich.  When you work for yourself, you build something underneath you that supports you.  The stronger it gets, the more money you make.  When you work for somebody else, there is nothing that you are building under you.  You are contributing to the foundation under somebody else; you are making that somebody else rich.

Work for yourself; build for yourself; make yourself rich.

Make your money work for you.
The second habit on how to make money is “making your money work for you.”  Lots of people get this concept, but few really understand it.  So, we’re going to explain it.
First, we’ll break down what it means to work for money; this is something that most of us are familiar with, but we’re going to shed new light on it.

When you work for money, you perform a task, and then somebody pays you.  Think about this though; think about what you’re saying when you say “I work for ____.”  You work for them.  You work instead of them.  They need to do something to make money, but you do that something instead of them.  You replace them.  The only reason you’re there is to make them more money.  You work for them, not with them.  The paychecks are your compensation for helping them make money.  They actually make a lot more money from your work than you do.  Seems unfair doesn’t it?  Yep, it is. But, you agreed to it, so nobody feels sorry for you.

Working for someone means you are exchanging your labor for money.  Part of performing labor is time; you need to spend time doing it.  This is why we all go to work.  But, because there is time included, there is a limit on how much we can make if we work for money.  There are only twenty four hours in the day.  There is an alternative to working for money, however.

Money working for you

Money working for you really is an alien concept to most people.  They just don’t understand it.  They might on a logical, conscious level, but they don’t know the feeling of it.  Money working for you does not involve exchanging your labor for time, so time is not a factor.  This means that you are not limited by time, like you are when you work for money.
Many middle class think that your money working for you means that your money earns interest.  Yes, that is true on a certain level, but it is not what the rich mean by working for you.  It means the money works for you, meaning instead of you.  You want your money to perform your labor for you.  If you are still performing your labor, it means your money is not working for you.  Of course, it could be performing lots of labor for you, but you could still be performing other types of labor, perhaps when no more money is available to do so, such as in the beginning processes of building a business.

Do you see how this ties into our first habit?  If you are doing what is advised by the first habit, you are living cheaply and saving most of your income.  Well, if you are saving most of your income, and you are making your money work for you, then you have a large amount of money working for you, don’t you?

This is what you want.  You want a lot of money working for you.  You need both habits to achieve financial freedom.  These really are the only two habits there are.  But, there are some other habits that focus on more detailed pieces of the journey to financial freedom.