So you read yesterday's blog and you're thinking to yourself, "there's gotta be another way to build generational wealth without the radical sacrifice!" You're right, there are other alternative methods to building wealth but they all require radical sacrifice. You may not have to scale back your entire life to the bare bones minimum but you're going to have to give up something. It's a universal law of sowing and reaping. If you want to reap a harvest of wealth you have to sow the seeds that will produce such a harvest.
Setting the Atmosphere for Breakthrough
At the core of the Generational Wealth Blueprint is the "Catalyst." Everyone has to start somewhere and the fact that almost 80% of Americans are living paycheck to paycheck, the catalyst is the only logical place to start. "What is a catalyst?" you may be wondering. It's that one "small" thing that creates something massive. Think about a tiny acorn that produces one massive Oak tree, that produces millions of acorns that will become thousands of Oak trees. Or think about the tiny snow ball that tumbles into a massive avalanche. How about that single spark that ignites a wildfire. You my friend will need a catalyst to start the ball rolling to generational wealth. Lucky for your, if you don't want to live like a hermit for the next 10 years there are other strategies available to you.
In the examples previously describe the "Catalyst" is the one single thing that we can point to that to catastrophic events. We know however, that the "Catalyst" was just the right stimulus at the right time, the culmination of a sequence of events that was merely topped off by the catalyst. I mention that because working class people in America are in prime position for a financial catalyst to spark catastrophic change in their lives. The right catalyst can spark a positive change, but the wrong catalyst can send a person on a downward spiral into depression, despair and even death. The conditions are ripe, the stage is set for either one to happen. A lifetime of financial struggles and economic injustice. We're working harder and harder to live of less and less. Yes the stage is set, the question is..."are you ready?"
Build an Asset to Buy an Asset
So we've come to the conclusion that you scaling your lifestyle back to the bare minimums is out of the question. Not that you're not passionate about building generational wealth, or like Dame Dash says "Hustling for your last name." You're just looking to sacrifice in other areas because we've also established there is no way around sacrifice. If a financial catalyst is what we need you really only have three options, spend less, earn more or a combination of the two. Since you don't want to spend less let's focus on earning more.
Everyone on this planet is an expert at something, but few are experts and turning that expertise into profits. I've been saying for years that 2 people will always be able to eat on this planet, the person that can work with their hands and the person that can sell. In this digital age we have to add a 3rd person to the list and that's the person that can teach what they know to others. With that being the case and you needing a financial catalyst ask yourself, "What can I do that others would pay me for?" Yep, you heard me right, if you need a financial catalyst, you may just need to start your own small business. Wait, don't pass out on me, I'm talking about making a couple hundred dollars per month in addition to your primary income. Hell, you can collect beer cans if you wanted to and make that every month. The question is, "are you sick and tired of your situation?"
Why is starting a small business in your home such a great way to get the financial catalyst you need to start your generational wealth building game plan? It's simple, as a business owner you get to play by a different set of rules. Remember those 4 challenges that we talked about in part 1 of this series, with taxes being one of them? What if I told you that you could likely get a $200 monthly increase in your household cash flow just by registering and starting your business from home regardless of whether or not that business makes a profit the first couple of years? Well this certainly isn't tax advise because I'm not licensed to do that, but that's exactly what I'm telling you. Every working class person in America should have a home based business in their wealth building portfolio, and here's why!
Uncle Sam...Friend or Foe?
The U.S. tax code was written for business people, by business people therefore it benefits business people. Because of this truth, everyone looking to build wealth in any capacity should have a business in their portfolio. The average person that starts a small business from home will save $12k-$15k per year in taxes. Is it starting to click yet? What could you do with that tax savings or that financial catalyst? You guessed it, build an emergency fund, pay off debt or invest. So whether you're good at baking, fixing small engines, babysitting or tutoring kids on the weekend, turn it into a legit business and start saving money on your taxes. If you should happen to be good enough to make a profit, that's even better.
Let's just play around with some numbers for a second. Say you started your business from home, you're able to adjust your W4 form on your job to reflect that you're an entrepreneur which means fewer taxes will be withheld or in other words you'd give yourself a monthly pay raise of a modest $300 per month. Your business brings in an additional $200 worth of profit. Again, you can likely collect $200 worth of aluminum cans on a single weekend if you wanted to. Just like that you have a $500 monthly catalyst. If you were smart you'd take the extra $500 and start paying off debt to free up even more monthly cash flow or work on your mini emergency fund. Instead however, you keep paying your debts as you normally do and you take the $500 per month and prepare for investing right away. What could $500 per month actually become at a descent rate of return (believe it or not double digit returns are normal if you know where to look).
In the 3 images above you see what it looks like to build generational wealth $500, $1,000 & $1,500 at a time. Do you think it would be worth it to find a way to turn at least one of your gifts, talents or passions into a business for the purpose of multi-generational wealth creation. i believe without a shadow of doubt there, something that you can start doing right now and build a profitable business from home to the tune of $300-$500 per month. Now that you can see what will happen if you put a little more effort into it, you can likely build far more that $500 per month in additional cash flow. The key becomes, finding a way to generate the extra income passively. That's next level wealth building because you can have the best of both worlds. You have the extra cash flow to pay off debt and invest but you wouldn't have to give up all your time to get it.
There are literally millions of ways to generate passive and residual income so I won't bore you with a pitch here. I will say that sticking to things that directly involve or are closely related to something you're passionate about is the best place to start. As you can see, no matter how you slice it, building generational wealth will take sacrifice, but I think it's worth it.
H Cortez aka Financial Health Mentor to the Working Class
Dave Ramsay Course