Wealth Building Requires Full Throttle
Posted on November 10, 2006
I’ve been flying airplanes for more than 30 years and I never cease to be amazed by the similarities between flying and wealth building. After taxiing an airplane into position for takeoff, you point it down the runway and give it full power in order to build the speed required for lift off. Once you leave the ground, you monitor the gauges and keep giving it maximum power throughout the climb until reaching cruising altitude. Throughout the climb, the airplane flies at reduced speed and often encounters turbulence. Only after leveling off at your desired altitude does speed begin to build and you are able to ease back on the power and cruise.
Wealth building works this way. In the beginning, it requires maximum effort, often with little or no visible rewards, in order to get started. Once things begin to move, it still requires maximum effort, often for years, in order to climb the ladder of success. Just as airplanes encounter turbulence, building wealth encounters setbacks and disappointments.
Can you imagine what would happen when a pilot encountered turbulence on the climb out if he or she said, “This is harder than I thought,” and pulled the power levers back to idle; or even worse shut off the engines? You know the answer. The nose would pitch forward, the plane would start down and unless the power was reintroduced, the plane would eventually have a very unpleasant encounter with mother earth.
While almost everyone knows what would happen to an airplane in this situation, why are so few people able to understand that the same phenomenon occurs with wealth building or achieving excellence in virtually every other aspect of life? Great artists, musicians, athletes, business executives and others who excel in any area of life had to devote thousands of hours, endure many disappointments, do things they didn’t want to do and keep moving forward before they enjoyed huge success. The ladder of success has to be climbed one rung at a time, but the further up one gets the less competition there is.
Have you ever watched the space shuttle lift off? When the engines first light off, it sits on the pad and tremendous flames and smoke pour from its base as power builds up. Then slowly it begins to creep upward. The power required to lift this giant vehicle off its launch pad is enormous, but as it blasts into the thinning air of the upper atmosphere, resistance decreases and speed increases until it eventually breaks the pull of gravity and goes into orbit. At this point, the engines shut down and the great ship coasts through space.
Wealth is not built by trading labor for money. Translate that to mean working a J-O-B. Wealth comes from investing time and money into assets that produce passive income; income for which you don’t have to trade time or money. In the beginning, the more time and earned income you can invest into these type assets the quicker the stream of passive income grows. Once passive income equals or exceeds what you can earn, your life becomes like the space shuttle in orbit. You get to sit back and coast, unless you want to continue working.
On the other hand, if you want to increase your standard of living dramatically, then you can continue working, live off your income and keep reinvesting the passive income until it generates enough income to support whatever lifestyle you desire. When you are able to live the way you want without having to work, you have achieved financial independence.
Here’s a tip! You get ahead financially from the money you invest, not the money you spend. Granted, spending everything you make lets you enjoy a bit more now, but you’ll never be able to enjoy more than what you can earn. To those who think that by earning more they can enjoy more, I would ask, what happens when you are no longer able to work and earn?
Many big wage earners, live in exclusive homes, drive fancy cars, wear the finest clothes, belong to country clubs and take expensive vacations with very little thought put into what they will do when they can no longer work. Maybe they think they will be able to work forever, but far too often they are forced to give up the things they enjoy when faced with forced retirement and limited income. This doesn’t have to happen.
Even average wage earners can live luxurious lives in retirement if they will start early, work hard, live on less than what they make and invest the difference. It isn’t magic, its common sense. Wealth building takes time. Your earning years equate to the take off and climb phase of an airplane flight, which is why the sooner you start and the more effort you put into it, the sooner you can reach altitude (financial independence) and start to cruise.
For those of you who have a steady job and are reading this thinking you can’t invest anything now because you’re barely able to pay the bills, you’re already living above your means. Unless you adjust your lifestyle to live on less than what you make and invest the difference, you’ll never be able to cruise. Keep this thought in mind; the sooner you start, the more you invest and the longer you keep at it, the higher standard of living (cruise altitude) you will be able to maintain in your golden years.
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