Today’s question comes from Mercy. She asks:
“How do I turn a small amount of money into big money?”
I get some form of this “How do I get rich?” question every single day. So I’m going to tell you.
Most people approach it like this:
- Save $100 a month.
- Cool, I got this. Now let’s try $200 a month.
- That was totally hard and it took a year. Let’s try $500 now.
- OMG I did it but it’s three years later and the mere thought of working until I have $1,000,000 makes me want to kill myself.
- Screw it, I’m just going buy a car with all this money I saved.
This is the mindset of people who end up living paycheck to paycheck their whole life. Ultimately, they see money as something to be spent.
People who become wealthy have a different mindset: money is something to be leveraged. So the fastest path to wealth will be investing.
And I’m not just talking about investing in stuff like real estate and stocks.
Here, let me show you how wealthy people use leverage:
- Start out making $100.
- Invest that $100 in assets OR skills that will eventually net you $1,000.
- Invest that $1,000 in assets OR skills that will eventually net you $10,000.
- Invest that $10,000 in assets OR skills that will eventually net you $100,000.
- And so on…
This is how to leverage your money.
How about some examples?
Okay, take the people who want to improve themselves. Maybe it’s their social skills, how to negotiate, or ways to be more productive. They find the best book on the subject and then agonize over spending the $10 on it. If you find just one gem of information in that book you can use, then it’s worth it.
So investing $10 in a book is leverage. (Btw, here are my recent favorites.)
Or take Tiger Woods. He has a golf coach. Now why does the best golfer in the world need a coach? Because everyone eventually plateaus, and stops getting better. A coach can point out mistakes, and make suggestions to improve. And for the same reason that Tiger hires a coach, so do people who want to become top performers in the business world.
So investing $350 for advice from a career coach like Penelope Trunk is leverage.
Let me show you one more example, this is my favorite. A reader forwarded me an invitation she received to a three-month long intensive mastermind group. It cost $2,000. Can you guess what her comment was?
“OMG I CAN’T BELIEVE PEOPLE CAN PAY THIS.”
This person might not be able to afford $2,000 right now, and that’s okay. Everyone starts at the bottom rung and works their way up. Eventually you won’t think twice about investing $2,000 in a mastermind group, because you know you’ll get 10X the results.
So investing $2,000 to join a mastermind group is leverage.
And of course, you can invest in assets like real estate and stocks. I always talk about this stuff, so I’m not going to this time.
But I will say when I became wealthy it wasn’t very exciting. I was most excited when I experienced firsthand what leverage could do: when I didn’t have to make $1,000 because my investments made it for me.
And this is leverage, too.