Acquire assets with positive cash flow and quit trading hours for dollars

If you suffer from the employee mindset–and most people do–you are substantially limiting your potential. Shifting to a  business owner’s mindset, however, can unleash your earning potential.

Look at it this way: as an employee, you work for the income directly derived from providing a service to your employer. You trade hours–of which you have precious few–of your life for dollars (or renminbi, rupees, pesos, etc.). In so doing, you are, by definition, limiting your earning potential to the number of hours you can work. Even if you put in lots of hours and take in a ton of cash, you’re still limited by the number of hours you can personally work. Even if you’re able to command an extremely high hourly rate, it’s still just that—hourly.

Fortunately for you, it is within your power to turn this model on its head. Rather than working for your money, put your money to work for you!

Instead of trading hours for dollars, acquire assets that will generate positive cash flow. Simply put, cash flow is what’s left from your assets’ income after you pay expenses. Assets include things like rental property or businesses, and their accompanying expenses can be things like a mortgage or payroll. Some assets, like mutual funds, have very low expenses, but may require a greater investment of your own money.

If your assets’ income, or revenue, is small and your expenses are large, you’ll have negative cash flow. If an asset’s revenue is greater than its expenses, it produces positive cash flow.

Assets make you money. If it costs you money—i.e., you’re losing money on it—it is a liability. (Note: your house is not an asset. Think about it. Do you make money or lose money on it?)

If you don’t have a lot of working capital (money saved), you can look for small deals at first or leverage lines of credit.

Or, to avoid debt and gain a much greater sense of accomplishment and self-worth, start your own business from scratch. You’ll have 100% ownership of an unlimited cash flow. Rather than trading hours for dollars, you can trade dollars for hours and buy yourself time by hiring other productive individuals to work in your business.

Not sure how? No problem. We have lots of great resources to help you.  With an investment of less than $100, you can start your own business.

So whether you start small with a few shares of a publicly-traded company, buy a rental house, or jump ship from your employer to your own business venture, focus on ways to earn positive cash flow by acquiring assets.

How have you been able to grow your personal cash flow? Post your comments below and help your fellow readers learn and grow.