Are You Leveraging?

LeveragingIn Robert Kiyosaki’s book, “Rich Dad, Poor Dad”, I learnt that one of the key ways to creation of wealth and to financial freedom is knowing how to use OPM – Other People’s Money and OPT – Other People’s time.  That is leveraging on other people’s time and money.

The rich have long known about this powerful concept and almost all have applied and used this principle in attaining their wealth. 

People like Jean Paul Getty, the first billionaire in America, as well as Donald Trump, Henry Ford, Robert Kiyosaki and almost every wealthy individual understood the power of leverage.

However, do not get the wrong impression that we have to take advantage of other people’s time and money to reach our financial goal.  It is just an action of mutual benefit.

Wal Mart, McDonald’s and many others have used other people’s efforts and time by providing job opportunities to their employees. These large corporations win because they get people to run their distribution centers and the people win because they get jobs to support themselves and their families.

Banking, stock market and real estate are examples of those activities that take advantage of leveraging on other people’s money. By allowing other people to use your money, or by using someone else’s money, you share in the profits that are generated from these venture or activities.

Leverage creates a win-win situation for all.

In Robert Kiyosaki’s Cash Flow Quadrant, one of the difference between an ‘S’ (Self-employed), and a ‘B’ (Business Owner) is knowing and able to leverage on other people’s time and money.
 
A self-employed does not know and will not delegate.  They think no one else can do better than them and will try to handle everything all by themselves, which cuases them to stay small and working hard.

On the other hand, a Business Owner will leverage on other people’s time and money to ramp up the business as quickly and efficiently as possible.  It is simply too hard and time consuming to attempt to create a business without leveraging the resources of other people, which includes not only money but also other people’s time and abilities.

For most people, leverage is the only way to break out of the HOURS = MONEY cycle. This is where you are trading a certain number of hours for a certain amount of pay. This is an important concept because the really rich do not trade hours for dollars. They use leverage and earn money by putting other people to work, other people’s money to work, their own money to work or all three.

What about you?  Are you leveraging or being leverage?