Achieving Financial Leverage

If a person spends most of their income, they have no leverage.
Consider that if we ran a small business, it would need to profit to Survive AND to Grow.

Having leverage means having the ability to grow.
It means being able to use what you have, with greater power,
so that your own resources exert effort FOR you.

Businesses operate that way – they use some of their money to pay you to work FOR them. They have achieved leverage, and use their cash to multiply their own efforts. The business owner sets up a situation…

A man wants to make pizzas and sell them to the world.
But he can only make a few pizzas and sell them by himself.
He has no leverage.
So he gets you to do all that work for him.
He just charges more for pizza than he pays you.
If the man could, he would charge infinitely more than he already does.
That’s the nature of business:
Businesses grow money, not deplete it.

If you cannot grow money, and instead rapidly deplete it, then you cannot grow financially, and you never attain leverage. Some people perceive saving money as simply ‘paying off debts,’ or saving for a rainy day, or saving for some distant retirement a million years away!!!

If someone spends most of their income, and the rest goes to pay off debts, and nothing goes into savings, and savings are not compiling great enough to eventually grow leverage, then the person is like the Pizza Shop Owner in the beginning – he can’t do much at all!

If a business operates the way most people operate their own finances, the business would be easily devastated, on the edge of ruin, and never really reach success. 

          Yes, many businesses take on debt, but the debt is calculated by extreme caution with an eye on projected income – and I personally agree with the billionaire Mark Cuban when I say: “Taking on debt to start a business is the dumbest thing you could do!”  You’ve already crushed your profit margin considerably at a time when you are most vulnerable.  That’s a statement made about taking on debt in a money-making venture.  Managing personal finances, with zero profits coming from personal expenditures is many steps behind the scenario of starting a money-making business in debt.

So let’s translate the situation to the futures of ordinary people:

If you do not operate like a business, then you can be easily devastated, ruined, and/or never succeed.  It sounds awful – it really does!  A lot of good people don’t want to be centered on money, to focus on money, think about money or obsess about it… (for great reason too!)  But the fact is, our economy operates on certain principles, and if we do not take the leading edge in managing those principles (the advantageous perspective) and achieve the leverage needed to succeed – then we can be financial failures every step of the way. That’s a difficult phrase to process, but living on the balance of a paycheck alone is not prodigious – it’s pretty dangerous.

HOW A BUSINESS SUCCEEDS –

A. Businesses have a plan, with numbers, that simply tell a spending/income story that works, and they adhere to that plan!  Some of us hate plans – we make up for being plan-less by establishing mentalities  (like pro-active behavior, smart spending, or opportunity seeking) and we allow those behaviors to put us in a place that might far exceed a more conservative ‘plan.’  The risk with relying on mentalities alone is that we might think we exhibit those behaviors, only to find out that we overestimated our actions, and actually came up dramatically short.  Crunching numbers is always a good idea.

B.  Businesses take calculated risks, which means, they don’t overspend budgets ever, they take on debt only when they are financially able to pay it off quickly.  Businesses spend much time seeking out better options that give them better results, and of course, better profits.

C. Businesses proceed with caution, knowing that the woes of competition can take a bite out of them anytime.

D. Businesses strive to use leverage and gain new leverage with every financial choice.

If a person operates like a business, then a person who earns a relatively low income can take steps to gain leverage – and that leverage will amplify their income dramatically – and that increase of income can lead to more leverage – that cycle will lead to a more reliable financial security all along the way – and a surprising extent of riches in the end.

The difference between being poor, or financially safe, can be as simple as making different debt choices, not buying expensive drinks at the gas station every day, forgoing brand new cars, and a few other ways of profiting from your own choices. Very simple things!

So, to think like a business:
#1 – Know your numbers
#2 – Avoid unnecessary debt
#3 – Remain aware of causes that can put you out of work – have back-up plans, seek out better opportunities. Plan for the worst – don’t lolly-gag as thought the vicious world of commerce is some money-laden cake-walk!!
#4 – Strive for leverage, because:

A Dollar saved
can become 4 Dollars in the in future,
and those 4 dollars, can become 16 dollars,
and those 16 dollars can become 256 dollars!!!

$1
1111
1111 1111 1111 1111
1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111
THIS IS WHAT BUSINESSES DO – (USING YOUR LABOR)
Yet most people treat their own money in the exact opposite way!!!

 :::::PAYCHECK COMES IN :::
$1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 1111 – BILLS
1111 1111 1111 1111 – DEBTS
1111– ENTERTAINMENT
$1 – LEFT IN THE POCKET
Inverting this situation is what leverage is about
SAGA can save your friends! Feel free to like and share!

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