EARNED INCOME

Financial success is:

Having enough capital to generate a permanent income flow to provide your desired standard of living.

Financial success therefore involves:

Establishing a measurable financial goal with a specific time frame and progressively achieving it according to predetermined strategy.

Permanent vs Temporary Income

In general terms you can make income by going to work yourself, by putting your capital to work or by luck.

Total income= you at work + your capital at work + windfall gain

Temporary Income

1. Salary and Wages 2. Business Profits 3. Directors Fees

Permanent Income

1. Interest 2. Rents 3. Dividends 4. Royalties

Windfall Gain

1. Inheritance 2. Marriage 3. Lotteries


Income is classed as temporary if the income flow ceases the day you cease work.
Permanent income on the other hand, does not depend on your active involvement.
It will continue to work for you for the rest of your life and can even be passed onto your beneficiaries and remain with them for their lifetime (if that capital is invested prudently).

With a permanent income flow you are free to choose your own destiny, without the hardship

of poverty.

The other main source of income is by way of benefactor or simply luck. As this is more good fortune than good management it is not discussed further.

If you were given the choice between $1000 now or $100 each year for the rest of your life which would you take?

Although you may not realize it, this is a choice you have to make throughout your life. You can either spend your income, or invest it. If you choose to invest it, the money itself creates the ongoing, and permanent, flow of income we are talking about.

The ideal is to continually invest savings so that the permanent income flow continues to increase to the point where you can break the hand to mouth cycle that most of us are cought up in.

Thinking in this way you can see that by saving $1000, you have earned yourself another $100 in permanent income for the rest of your life.

The choice is yours, spend now or invest in an income stream that will work for you for the rest of your life. Invest in that income stream and one day you will achieve financial independence and financial security.

Most of us have a feeling of inevitability about our financial destiny. We accept that we are going to have to work for the rest of our life, and some people even accept that others will have extreme wealth while they won’t. But this need not be so. Take command of your finances and command your destiny. Save so that one day you can achieve financial success. The more you dedicate yourself to increasing savings the easier it will be to become financially secure.

Your dominant desire must be to save more money. To do this, you must invest as much as you can. This will mean that you earn more, invest more, earn more, invest more, and so on, until you hit a desired wealth level. When that stock of wealth is sufficient to provide an income flow which will support your desire lifestyle, then you could retire and enjoy yourself.

Don’t be fooled into thinking that retirement is for the aged. Each of us can earn that luxury before our geriatric graduation. Remember the first dollar is the hardest to make. Having reached your first target, congratulate yourself, reflect, smirk, and then motivate yourself on to your next goal.