Thursday, October 05, 2006

What is leverage?

What is leverage? ( In order to make more money!)

In order to retire young and rich, you must make a lot of money in a very short time. If you are thinking of earning that money by using your own time and effort, I would say that it is unlikely for you to achieve that in 5 or even 10 years.

Each of us has 24 hours. How much do you earn per hour, let's say you earn 30 bucks per hour, how many hours you can work per day? Let's imagine that you work very hard and you extend your working hour to 12 hours a day. You earn 360 bucks per day ( yes, it is a very good money for almost all of us!), do you know how long for you to get 1 million, the answer is 2778 days or 7.6 years. This is provided you keep every cent your earn from your work. So do you think it is possible if you earn money by only both your hands and the limited time you have in a day. The answer is 'NO, NO,NO'!!

I would like to talk about leverage. To make it simple, it is a technique where you use minimal effort to achieve the greatest result. I would say there are two major leverage techniques to make your money grow. As you see from above scenario, the total money you get per day equals to your hourly wages times how many hours you work per day,

Daily wages= Hourly wages x working hours
For you to increase your working hour from 12 to 14 or even 16 hours is impossible because we need to have time to sleep, eat and spend time with our family. Therefore, since that we only have 24 hours per day, we can't increase our daily wages by pushing up our working hours, however, there is one technique we can do it.

You may be wandering how can we do it? Just look around you, what do you see around you? You are seeing fast food restaurants mushrooming every corner in your city. Yes, you are right , the answer to the above question is you have to duplicate yourself. Instead of forcing yourself to work for yourself, duplicate yourself so that more people would make money for you!

So…… you maybe wandering how to duplicate yourself........?? It is easy, if you have a restaurant and you earn so much a day, duplicate your restaurant so that you can have more restaurants to get more money. You do not use your money, you can franchise your business. If you are getting commissions from selling property, set up a company and you hire more agents (agents like yourself) to sell property for you and you get the commissions. If you are doing direct selling business, get more people to join you and sell your products for you and get more commissions for that!

Do you see the point? It is better to have 10 same people making 30 dollars for you instead of you yourself have to work 10-12 hours to get that same money?

Anyway for you to leverage your effort is leverage your money. From the above formula,

Daily wages= Hourly wages x working hours

OK, for you get more hourly wages, there are a few possible ways to do this,

1) Get a better pay job,
2) Get a job where you can do two jobs together at the same time and you will be paid by doing these two jobs simultaneously, ( a good example of this, if you are involved in internet business, build a site where you can promote 2 or even 10 products together and you are being paid from all these products)
3) Make you money grows by itself, yes, since that you are getting a fixed hourly wages, you can put your hard earned money in some investment vehicles and see your money grows by itself.
4) Pull money from your friends, relatives so that you can start a joint venture that gives you a better hourly wages such as starting a new business etc.....

So, the key to make you money grows doest not depend on how hard you work. It all depends on how you leverage your money and time!

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