In last week’s post, I spoke about Secret #1 of the wealthy. Today I will talk about what I consider the second secret of the wealthy.
If you have heard me on a radio show or podcast, you probably heard me explain these. I use the acronym AFI as an easy way to remember them. And this has nothing to do with the American Film Institute.
The three secrets are:
1. A = Attitude
2. F = Forms
3. I = Investments
Today I will address the second secret – Forms.
You’re probably already familiar with the same forms the wealthy use like a net worth statement or an income and expense form. If you’ve applied for a bank loan, you’ve used similar forms to provide this information to the bank.
If you use Quickbooks or a similar program, you can generate these forms with the click of a few buttons. If you use a bookkeeper or CPA, they can easily provide these forms to you, and they probably already have.
The difference is how a wealthy person, or someone with a wealthy mindset, looks at those forms. Your accountant might say your home is an asset. You might say your home is an asset.
When a wealthy person is looking for an asset, he or she is looking for assets that can produce an income.
Unless your house is generating an income, like you use it for your business, or you rent a room, or you use it for an AirB&B, then it is a liability. You might ask, “How that can be?”
You’re required to pay property taxes on your house. You pay utilities and insurance. It requires maintenance and repairs. These items cost money. Typically your house is not an income-producing asset, it’s a liability. It costs you money; it doesn’t make you money.
When people with a wealthy mindset look at their income and expense form, they want to see how many sources of income they have and how many of those sources are passive. The more sources the better. They’re looking for more than a paycheck. They’re looking for things like trust deeds, royalties, rents, interest, dividends, trust distributions, and so on.
How are you looking at these forms for yourself?
To Your Prosperity,
Rennie
