Reading: The Road To Wealth - Increasing Your Income & Budgeting Your Expenses Slides

LESSON 6:  THE ROAD TO WEALTH - 
INCREASING YOUR INCOME & BUDGETING YOUR EXPENSES

We Have Looked at WHY and WHAT
Now We Start to Look at HOW

What is my purpose in life?

What is God’s will for my life?

Why do I want to achieve financial prosperity?

What is your burning desire?

What is this dream that you have?

Key Concept: Net Income

  Earnings

- Expenses

=================

= Net Income

Net Income is the difference between what you Earn and what you Spend.

What Makes the Difference Between
The Rich vs. Middle Class vs. Poor

Poor = Net Income of (-). 

They spend more than they earn. 

They borrow to buy the things they want.

Middle Class = Net Income of (0). 

They live paycheck to paycheck.

They do not borrow, but do not save.

They spend every dollar they earn.

Rich = Net Income of (+).

They save a part of all they earn.

They live under their means.

They are smart and patient and know the key to wealth is savings and investment. 

Rich vs. Middle Class vs. Poor

Poor 

  Earn     $100 

- Spend $101

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₌ Borrow ($1)

Breakthrough Thought:
Do Not Confuse Your Needs
With Your Wants!

“The road to wealth consists simply in expending less than we earn”. – P.T. Barnum

Last week we learned that the key

     To financial success begins with Saving -  

     Generating a Positive Net Income

This week we will learn how to apply the key 

    lesson we learned last week!

If you apply this lesson, your life will never be the same. The decisions you make with your time and money will either put you on the Road to Wealth or on the Path to Poverty.

Read: The Seven Cures for a Lean Purse

“I shall teach to you in simple ways how to fatten your purses.  This is the first step leading to the temple of wealth.”

The Richest Man in Babylon

The Income Statement

INCOME STATEMENT

INCOME

+ Earned Income

+ Business Income

+ Investment Income

+ Passive Income

 

EXPENSES

-  Tithes

-  Taxes

-  Interest

-  Insurance

-  Consumption Expenses

_{====================================}

NET INCOME

Types of EXPENSES

Giving: “"Honour the LORD with thy substance, and with the firstfruits of all thine increase”. Prov 3:9

Taxes: “Render to Caesar the things that are Caesar's, and to God the things that are God's” Mark 12:17

Interest: "Do not let interest work against you; if you do there is no chance for success in life so far as money is concerned.“ – P.T. Barnum

Insurance: “It is always possible to make provision for protection with small payments at regular intervals” – George S. Clason

Consumption Expenses: "Any time money is used consumptively, it is gone forever and can never be used for anything in the future.“ – Ron Blue

Controlling Consumption is Key

3 Key Steps:

Live within your means

Control your expenditures

Make a budget and live by it

Live Within Your Means

"It becomes more difficult to dream while you are under financial stress unless you have unusual focus.  My strong advice to you is to live within your means."

― Peter J. Daniels

"He who spends more than he earns is sowing the winds of needless self-indulgence from which he is sure to reap the whirlwinds of trouble and humiliation."

― George S. Clason - The Richest Man in Babylon

"To enjoy financial success, living within the limits of the resources you allocate to your personal or family use is essential, or to put this vital concept another way: you cannot grow financially — no matter how high your income — unless you take in more than you spend."

― Paul J. Meyer - Building Financial Success

Create a Budget

"Budget then your necessary expenses.  Touch not the one-tenth that is fattening your purse.  Keep working with your budget, keep adjusting it to help you.  Make it your first assistant in defending your fattening purse.

The purpose of a budget is to help your purse to fatten.  It is to enable you to realize your most cherished desires by defending them from your casual wishes.  Your budget shows up the leaks from your purse and enables you to stop them and control your expenditures for definite and gratifying purposes.

Budget your expenses that you may have coins to pay for your necessities, to pay for your enjoyments and to gratify your worthwhile desires without spending more than nine-tenths of your earnings."

― Richest Man in Babylon

The Purpose of Budgeting: Control!

"Do not let yourself slip into the negative emotional trap that "this is some kind of super-restrictive BUDGET."  This is not a budget - it's a spending plan or a resource allocation plan that simply guides you in how to best use your financial resources.  It's not a restrictive approach to using money, but rather it's an aggressive approach to building a future of YOUR OWN design.  Most importantly, it's making you "un-vulnerable," and eventually... financially independent.

 You're NOT giving things up.  In fact, you are GAINING a few important things, like control and ownership of your own life ― and freedom of choice about what you do with the rest of that life ― not to mention what to do with the hundreds of thousands of dollars of interest you otherwise would have paid to creditors.”   ― John Cummuta

Key Breakthrough Thought: Don’t Confuse Your Needs With Your Wants!

“What each of us calls our ‘necessary expenses’ will always grow until they equal our income unless we protest to the contrary.  Don’t confuse your needs with your wants. – George S. Clason

Why We Spend Money on Unnecessary Expenses

Convenience

Self-gratification

Appearances

It’s Good to Spend Less…
But it’s better to Make More!

Sources of INCOME

Invest in Yourself: New Mindset, New Ideas, New Concepts, New Attitude, Motivation, Understanding, Commitment, Positive Environment

Earned Income: Hourly Wages, Salary, Bonus, Commission, Fee, Stock Options 

Business Income: Business Profit Sharing, Distributions

Investment Income: Interest, Dividends, Capital Gains

Real Estate Income: Rental Income.

Passive Income: Rental Income, Royalties, Overriding Commissions

“The opportunity to earn is more of a pursuit than a gift.”

–  Peter J. Daniels

1. Invest in Yourself!
This is the Best Investment in the World!

2. WORK – The Key to Earning Money

Wealth grows wherever men exert energy.

There are many trades and labors at which men may earn coins. 

Work is your best friend.

Work is offered in plenty to willing workers, but naught for men who considered themselves too good for work.

Work attracts many friends who admire your industry and the success it brings.  Work brings you the honor you enjoy so much.

Increase Your Ability to Earn

"As a man perfecteth himself in his calling even so doth his ability to earn increase.“

"Determine that you will be exceeded by none.“

“More interest in your work, more concentration upon your task, more persistence in your effort, and, behold, few men could produce more in a day than you.  With reasonable promptness your increased skill will be rewarded.“

"That man who seeks to learn more of his craft shall be richly rewarded.  Learn the methods and the tools of those most skillful in the same line (of work).  Consult and exchange knowledge with other of your calling.  Seek better goods that can be purchased at lower prices."

― George S. Clason - The Richest Man In Babylon 

3. BUSINESS – The Best Investment to Become Rich

Entrepreneurship – Set a Goal to Become Your Own Boss!

Learn to Buy – The best way to learn a business is to learn to purchase and negotiate. Spend only on essentials. 

Learn to Sell – The best way to make more money is to learn to sell on commission, not to depend on a salary.

Learn Accounting – You must always make a Profit!

Learn to Value your Time – Focus on what only you can do and Hire people to do all other tasks. 

Reinvest Your Profits to Grow – Do not spend them on improving your lifestyle!!!

Getting a business loan is ok – as long as the interest rate is low and you set a goal to pay it off ASAP. 

If Your Want to Be an Entrepreneur

Invest in Your Greatest Asset – Your Self!

Destiny of the 3er Millenium $2,500

Coaching with Peter J Daniels

Wake Up Warrior Program

https://warriorbook.com/blackbook-documentary

4. INVESTMENTS – How to Participate in Public Businesses

Another way to make money is to invest in public businesses.

This can be done by investing capital and partnering with entrepreneurs and other investors.

A competent financial advisor can help you choose where to invest your money. 

If you invest in mutual funds it is best to invest in an Index Fund like Vanguard’s S&P500 index fund.

If you want to learn how to do it yourself you can take our Wall Street Investments Seminar on Stocks and Options.

Wall Street
Investments Seminar

                Stocks and Options

5. REAL ESTATE –
How to Invest in Properties

You can buy a property – for example buy a house and rent it.

Your will need to learn to deal with tenants, charge rent and make repairs when they are needed. 

You are responsible to pay property taxes, insurance, fees and utilities.

You can buy a home to fix it and flip it.

There are seminars that teach how to do this. But be very careful not to pay too much. Make sure you have enough capital to pull it off before you invest too much time and money and end up wasting it.

Remember it is not easy to find these properties, and that the expenses to remodel can be quite high.

Remember – There are no easy profits. Everything takes time and effort. Making mistakes is part of the learning process.  

6. MULTI-LEVEL MARKETING – Opportunity or Timewaster?

There are many “opportunities” called by various names:

Multi-level Marketing

Piramyd schemes, etc.

They are not all the same – some are legit and do work. Others are a fraud and timewaster.

See if they offer training and coaching.

The product is more important than the compensation plan. If the focus is mainly on recruiting other people than on selling a very good product BEWARE!!

In the good ones, everyone wins. In the badn ones only the first people win and the rest lose.  Remember there are no shortcuts to success.

Thoughts on Earnings

"Realize that earning is only the first step in maximizing money as a resource."

― John Edmund Haggai - Paul J. Meyer and the Art of Giving

 

"What you earn is the foundation, your initial cash flow — your money machine — for building your financial success."

― Paul J. Meyer - Building Financial Success - Lesson 2

 

"The money you earn is nothing more than the recognition you gain from life for your efforts properly expended."

― Paul J. Meyer - Building Financial Success - Lesson 10

 

"Do you have specific goals for earnings, savings and investments?"

― Paul J. Meyer - Building Financial Success - Lesson 2

 

"Make a prayer that during this decade of your life you will earn more and give more than you have during all the previous years of your life combined."

― John Edmund Haggai - Paul J. Meyer and the Art of Giving

 

El Estado de Resultados

ESTADO DE RESULTADOS

INCOME

+ Invest in Your Self

+ Earned Income

+ Business Income

+ Investment Income

+ Real Estate Rental Income

 

EXPENSES

-  Tithes 

-  Taxes

-  Interest

-  Insurance Premiums

-  Consumption Expenses

_{====================================}

NET INCOME

Conclusion: Generate Margin!

"If you want the magic of compounding working for you instead of against you, that will only happen if you spend less than you earn.  You must have a cash flow margin in order to achieve your long-term financial goals.

 In order to generate enough cash flow margin each year to meet your long-term goals, you need to make the long term a priority over the short term (delayed gratification).

 The only truly discretionary place to cut spending in order to generate this margin is in the area of lifestyle."– Ron Blue

"True economy consists in always making the income exceed the out-go . . . so that, under all circumstances, unless some unforeseen accident occurs, there will be a margin in favor of the income.“ – P.T. Barnum