I had been working in economic development and working closely with entrepreneurs in particular for almost 20 years before I heard the term or concept of a ‘money machine’. Although I hear that or something similar to that now on a weekly basis, I have to say that 15 years ago this was not a term or concept that was even in the wealth building space.
In giving credit where credit is due, it wasn’t before I read the book “The Millionaire Maker” by Loral Langemeier that I heard of the concept and term she refers to as the ‘cash machine’.
Essentially the premise that Loral makes in her book is that in order to build wealth you MUST own a small business, a ‘money machine’, that generates revenue in excess of expenses. It sounds unbelievably simple and obvious but to be frank, I work with a lot of clients to help them build wealth and this is not one of the thoughts that immediately comes to their mind. In fact, it’s quite the opposite.
More specifically, these clients are almost always more apt to focus on how they can make more money in their existing job.
Optimizing what we get paid is good BUT we need to make more income
Don’t get me wrong, optimizing something you’re already doing makes a lot of sense. If for some reason you have the ability to increase your wage per the hours that you ‘currently’ work each day, PLEASE do so! This just is a no brainer.
If you’re currently working 10-hours each day and making $35 per hour and could make $40 per hour for those same hours being worked, that would be an absolute given! Who doesn’t want to get paid more for the time that they’re already working?
However, that’s not necessarily the thought process that these individuals go through. INSTEAD, the primary solution that they come up with is to work MORE hours in a given day for the SAME amount of pay per hour! Yikes! This would mean that if they were working 10 hours a day and making $35 per hour, they instead think they should be working 14 hours a day for $35 per hour.
Do you see the problem in this thinking? THIS is the EXACT definition of a proportional compensation model. More specifically, if you want to make more money just work more hours. This is just wrong thinking on so many levels.
In addition to this being the definition of insanity it is also the definition of what you should NOT be doing to build wealth. It is unscalable…want to make more money, just work more hours. But what happens when you’re working every possible hour in the day? It is also without leverage…YOU are the only one that is working to generate income and there’s no other ability to generate income if you’re not trading hours for dollars.
It’s so important to own a Money Machine
Undeniably one of the major principles of wealth building is owning a ‘money machine’.
We need to own and control the ability to generate income on our time frame and to be able to control the variables of how we create this income. (For more details on the advantages of owning a business go to https://thefinancialstoic.com/?p=230 )
It is EXCEEDINGLY hard to generate wealth if we’re always dependent on someone else who controls not only what we are worth…they set the amount of compensation that we make per an hourly wage or an annual salary…but also when we get to participate in wealth creating activities…someone else sets the amount of hours we can work and when that occurs.
People who think like employers tend to build wealth quicker
After working with individuals in the wealth building space for well over two decades, I have come to a very clear observation. Those individuals who are able to think like employers are the ones that tend to build wealth at a quicker pace and tend to build more of it.
It’s not because they are the ‘anointed’ ones or that they have a special strand of DNA, it’s simply that they are able to see themselves owning the money machine which in turn puts them in a position of creating wealth at their direction and on their own terms.
This one decision allows these individuals to control the amount of hours that are dedicated to building wealth but perhaps more importantly, it provides for a vessel to apply the maximum amount of ‘leverage’ in order to build wealth.
What do I mean by this? Simple. It puts these individuals in a position where they either have a system whereby they receive a premium or profit off of the value they provide in the marketplace, or they have other individuals working on their behalf generating income.
Owning a money machine can detach our income from our labor
Basically, the speed in which you will build wealth and the amount of that wealth is going to be directly linked to your ability to own business assets that generate income where your time is not directly attached to a wage.
It may be for others in your employ but for you, you need to own the money machine that generates this income when you’re not there or not working.
This is ALL building up to the fact that one of the single most important wealth building elements, perhaps THE most important, is that you need to own a money machine that can allow you to generate income disproportionately to the time you put into it and then purchase additional assets that build wealth on your behalf.
This will either become your ‘day job’, essentially your full-time business interest, or it will become a side hustle that you grow to augment and hopefully at some point supplant your earned income from a job that you work for somebody else.
If you cannot own a money machine your chances to build wealth aren’t going to be eliminated but I am here to tell you that it is going to take a LOT longer to build wealth and it is going to be less than what you otherwise could have generated. Again. This is not an exercise in trying to make you feel bad. That’s not what this is about. What this IS about is pure math.
Conclusion
Chances are you are more apt to generate more wealth and in a quicker time frame if instead of you just being able to work 8 hours in a day you were able to hire 5 employees who EACH worked 8 hours a day working on your behalf.
So instead of just you putting 8 hours towards your wealth building activities, you have 5 others putting 40 hours, or a whole week, in just one day! Now THAT is leverage!
So in order to build wealth at a much quicker pace and more of it, we need to become comfortable with owning a money machine. We need to become comfortable being the employer, someone who is going to create and use leverage to build wealth. We need to take our own fate into our own hands. WE need to call the shots for ourselves…especially when it comes to building our wealth.
Although we can build wealth much slower and at lower levels, the absolute truth is this; the slower approach or the accelerated approach BOTH take roughly the same amount of mental energy. They also both take similar levels of commitment.
However, one approach takes a WHOLE lot less time and generates a whole lot MORE wealth!
