The Four Types of Money in a Nutshell

In Season 2 of the Millionaire Wealth Principles, I talked about understanding the 4 types of money which are income, profit, flow, equity. Typically people forget about the mysterious third and forth where people forget about the profit. Most business owners are in business for wages, just to make a little money, to get by. Most people think that they’re in business to make money. To me, it is the opposite, a business is meant to be sold, a business can be sold worth something if it has a profit, not income. Income doesn’t make a business, profit does make a business. Income pays your bills, it gets you by, it keeps money going but that isn’t what builds a good business, business is based on profits. Real estate investors’ profit comes in the form of dividends paid to you. If you’re in a real estate investment trust (REIT), profit is a dividend would be a nice form of profit that is paid out to shareholders.

For the previous Millionaire Wealth Principle #2 Sn #2 of 52 Millionaire Wealth Principle #2 Choose A Business That Can Make $1,000,000

If you’re a real estate investor and you’ve seen revenue/income, money coming in that’s gross rents. We know that we don’t always keep that cash, it always goes back out. That’s what flow is all about because flow is income that stays in the company, it just keeps rotating. Flow can increase with market spend, it can be part of your marketing, flow can just be what floats, the money goes out every month because you have mortgages, you got expenses like water, like maintenance.

The last one is equity which is an inverse relationship with the dollar, it is the coolest ghost money, you don’t get taxed on equity. It is the coolest type of money out there that we use in the 1031 exchange, it is the money we use to buy assets with assets that we already have. It is the money that right now goes up the most while the dollar goes down. You can only attain equity when you attain assets, equity comes from owning assets. Your business can be an asset if it can be evaluated. The easiest thing is to buy an asset, buy an existing business that is already running and making money. The second is to buy a business that could make money, it is just there and it is just missing employees and the third is the hardest where you have to build a business from scratch.

Mitchell Jaworski Presents the Book of the Week

Mitchell Jaworski talks about the book of the week which is The E Myth by Michael E. Gerber which is basically a blueprint if you’re going to be a business owner. Many of us have read it, hopefully, it resonates with you because it has many messages but the biggest message is that most people leave the day job, leave having the boss, they don’t want to work for somebody else and all they do is essentially move into that same job except they’re just working for themselves, doing that same job, now doing every other job of that business as opposed to when they just had the one job. The whole point of it is to build a business not building a job because you create your own prison and become your own bottleneck within that business. So it is all about how do you expand, how do you essentially build that blueprint to build a team and it starts from day one.

What Does Money Offer To You?

Money gives you options, it gives you choices. Income that comes from your business gives you choices, profit gives you better choices, equity allows you to buy whatever you want, whenever you want with whoever you want however you want and if you don’t have equity you’re missing freedom. Equity does provide freedom, Profit provides flexibility, Income is survival well as flow pays the bills. I don’t believe the people focus on income though I believe our Alchemist community does. People outside this community focus on the flow where they are more concerned with how much they need to pay the bills, they’re not focused on generating income.

An Exercise To Keep Your Brain Hooked And Make You Accountable And Committed

Let’s do an exercise. I want you to write down your income right now, just put an annual number then on the side of it, write down your flow, flow is your expenses, money that comes in and goes out, and then on the side of the flow, write down your profit and equity. If you don’t have it yet, then you have to set goals for your profit to be at least 10% of your flow minimum and equity to be at least double your profit.

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