Principle 1: Maximize Income from All Sources

As discussed in the last post, your personal financial health comes down to five simple principles. That’s it. Just five.

However, it’s not that easy. (It never is.)

These five all have significant sub-points. So over the next few days, we’ll take each of the five principles and describe these sub-points.

Principle 1 is to “maximize income from all sources”. In order to maximize your income from all sources, you must:

• Get as much education as possible – the more meaningful education you have, the more money you’ll make.
• Manage your career like an asset to maximize your happiness and income.
• Consider generating more cash by starting your own business, getting a second job, turning a hobby into a cash business, or being creative like renting out a room in your house.
• Make your money earn money through investing wisely.

Yes, there are exceptions to all of these. Bill Gates didn’t get 30 years of education. Warren Buffet doesn’t have a second job (and though he likes bridge, I don’t think he’s turned it into a money maker), and Ross Perot doesn’t have a co-ed living in his basement (at least to my knowledge he doesn’t). So while there are exceptions to the rule, generally, for the vast majority of people out there, these hold true.

And since they impact almost all of us, we’ll be talking about them quite frequently as we learn to follow Principle 1.

Click here to read about Principle 2.

Comments

[Jose Anes]

Funny the joke about Ross Perot.

I have had one or more persons paying rent at my own house since I bought my first property. First a friend that I know since college and now my wife. From time to time other friends.

By using low rents, and bigger house that could be afforded independently, we have all enjoy the spare cash made available that doesn't have to go to a landlord or a bank.

[MA]

I also have someone renting my basement. The rent money goes directly towards other investments. I have been renting space in my house for nearly 4 years now. Originally, this strategy helped me get out of debt. Then the strategy helped me build a pretty high net worth. Ironically, I shared my experience and recommended to the others the same strategy. Everyone use to laugh at me. In fact, I recommended this strategy to a realtor more then 3 years ago and he called me crazy. I was crazy until he bought his first house and paid the entire mortgage by renting the rooms in his house.

[Christopher Bermingham]

Wow Jose! How did you convince your wife to pay rent?