How diversifying my income increased my financial flexibility and helped me pursue my passion
“By far the best investment you can make is in yourself.”
- Warren Buffett
When you think of wealthy people like Waren Buffett, you think of their financial wealth like stocks, real estate, and swimming pools filled with gold that they dive into Scrooge McDuck style.
Few people think about how these people acquired their wealth. I’m not talking about the trust fund babies; I am talking about people who started from modest means and built their wealth from scratch.
These people invested in acquiring skills and knowledge that allowed them to earn a great living and control their time.
They invested in their human capital.
Increasing your human capital means learning skills to make more money.
I’ve said it before and will continue saying; wealth is created from income.
Your ability to invest in stocks, bonds, real estate, or any other investment is made possible by your ability to earn an income.
The three-step formula for building financial wealth is shockingly simple.
- Step 1: Increase your income.
- Step 2: Maintain your current lifestyle.
- Step 3: Invest your disposable income in assets that increase in value over time.
Rinse, repeat.
This is generally a long, slow process. Some people try and cheat the process by swinging for the fences with risky investments like meme-stocks. Trying to get rich faster through speculative investments is like trying to get rich by buying lottery tickets.
