The FINANCIAL -- With so many luxury brands opening in Tbilisi —Massimo Dutti,
MAC, Hugo Boss, Burberry—even ordinary consumers must be wondering how
the rich earn their money, and how they have any time to spend it.
What's the secret to owning a dozen ultra-expensive cars? How does a
person collect enough money to have the life they want without working?
The ability to get rich hinges on a person’s fundamental belief about money. Warren Buffett who is one the richest men in the world defines money as an “IOU from society”. Money is a token that a person can trade with the world, for something they need or want. It has no intrinsic value.
Looking beyond what money can buy and thinking of it as just a promise of societal leverage is a common attitude of rich people.
Another common mindset of rich people is their view of the value of money compared to the value of their personal time. Most people highly value the thing in their life that is most scarce. It follows then, that while working people place a high value on money, most rich people place a high value on time.
The result of this money / time value system keeps the working class, working. When you work for a living, you are simply trading your time for money. There are lots of great reason’s to work, and many rich people like Mr. Buffett work very hard. However, if your main goal from work is to earn money, then you are not on the path to becoming rich. If you are content to trade your time for money then there is a good chance you will be forced to work for the rest of your life.
In a set of interviews The Financial conducted in January, 60% of Tbilisi employees stated that salary satisfaction was more important to them than job satisfaction. This 60% is caught in a thinking trap that is very difficult to escape from. As their career s progress and the salaries increase, so will their spending habits and other financial demands. These people are likely to be working for the rest of their lives, trading their time for as much money as they can get from society at that particular moment.
The fundamental truth is very simple, but often hard to personally accept. Rich people do not trade time for money. wealth y people get their money without trading time for it. One of the bestselling financial advice books of recent years is Robert Kiyosaki's Rich Dad, Poor Dad. Kiyosaki explains how his real father, who was very well educated, worked for decades in great paying jobs and was always tight on cash. His real father lived in a nice house and owned late model cars. However his real father traded his personal time for money his entire life.
On the other side of town, Robert’s best friend lived with his father in a clean, but modest house. His friend’s father drove older cars that were not particularly stylish or flashy. By all outward appearances, Robert’s father was well off financially, and his friend’s father was poor.
However, the truth was exactly the opposite. After several decades, his friend’s father had retired and moved into his dream mansion. Robert’s dad was still living in his same “nice” house and still working.
His friend’s father knew the secret to getting rich was not to trade time for money. He learned how to use money to make money. Instead of spending his income on a nicer house or newer cars, the financially astute father kept his personal expenses low and put his extra money to work. He started with a small grocery shop and grew his money into an empire.
Take a lesson from our local billionaire, Prime Minister Ivanishvili. Whether you agree with his politics, it is impossible to argue his success. He certainly did not get rich trading his personal time for money, and neither can you.
If you want to actually be rich, then you need to answer this one simple question. How can you get money without trading your time for it? Thinking about illegal schemes won’t do you much good either. Even criminals get caught in this same trading time for money trap. It takes personal time to steal a car or break into a house. And crime always carries the risk of getting caught. If you create an income stream that does not you’re your personal time, is sustainable and has the possibility of growth, you will become rich. Your self-generating income might start out as just a seed, but the financial law of compounding will take care of the rest.
For this week’s article, I will leave you with a simple math problem to drive home my point about compounding. If you took a one year job from Mr. Ivanishvili, would you rather him pay you 10.000 Lari each week OR pay you One Tetri for the first week and then double your salary every week for the rest of the year? I know which job Mr. Buffett would take.