Your current income is probably classified as earned. If you have only limited savings and no investments in assets on which you can earn income you are not familiar with passive or portfolio income. OK – your primary goal then is to obtain or increase your asset base in order to start earning more passive income. Eventually you will move to a time when all your income is coming from passive sources. But how?
The first step you must take is to save. If you are at a stage where all your income is being used to live and pay off debt, the notion of saving is a foreign one. But you have to start building your asset base through savings. Start now because you will need time to build an appreciable assets. Setting aside a fixed amount from all your income sources will require a rigorous discipline. Only you can provide the determination to adopt this strategy and it is not easy to begin. Once established you will find it becomes much easier and after a while turns in to a positive experience and you will have the will to save more. Let’s say you make the commitment to set $500 each month as savings, you need to think of this as a minimum you will save. The more you can save above this amount the better. Don’t fall in to the habit of paying extra bills that have not been foreseen from savings. Find other ways to meet these obligations.
The golden rule you must follow is to pay yourself first, not last. Find ways to pay your bills from other sources (obtain extra work and think of other creative ways to get extra income – eBay for instance). Your savings are not designed to pay bills, but rather are earmarked for investments to get you out of a dull boring existence working for someone other than yourself. While these goals are designed to get you to the best possible place in as little time as possible, this doesn’t mean you can’t enjoy life while you get there. Just be prudent in how you spend. At the beginning, only spend for necessities. Remember the goal is your ultimate financial freedom.
The second step is to draw up a plan of what you will do once some initial financial success is yours. This is a vast subject and beyond the scope of this article.
Once you have determined what area of endeavor you will operate in, set aside time to visualize what your prospective business will look like. This will allow you to prepare for the future and to work through all the aspects that will require attention. The time span for the transition from working in a job to running your own business depends on many factors and will vary tremendously depending on the type of business you have targeted.
Once these preliminaries have been developed, do your research. Find out everything there is to know about the business you are planning. Talk to people you know who are involved in the same or a similar avenue. There is a wealth of information on the web and also in your local library. There may be seminars in your area on topics that will be germane to you. If you can, take a second job in the industry of your choice. Nothing like first hand exposure to ensure you are on the right track and to learn from others whose assets are at risk the pitfalls and the opportunities that exist.
Your learned capability plus the will to find financial security will power your drive to become wealthy. It goes without saying that there will be drawbacks. Once you have developed the ability to analyze a situation from a financial point of view you will be able to see an incredible number of opportunities in every situation. As you train yourself to review everything that you encounter with a view to finding ways to make money, the opportunities will multiply. This ability cannot be developed overnight except in rare individuals but it can be developed over time with application and practice.
This article will be followed with a series of articles dealing with wealth building and its many aspects.