“Leverage is the reason some people become rich and others do not.” – Robert Kiyosaki
If you look up the word “leverage” in a dictionary, it will probably tell you something like this…
“the action of a lever, a rigid bar that pivots about one point and that is used to move an object at a second point by a force applied at a third.”
Confusing, right? What does “leverage” have to do with building wealth?
Now, let me give you another definition that is simpler to understand…
“Leverage” is the action in which you can get more done with less.
And yes, as Robert Kiyosaki has said, “leverage is the reason some people become rich and others do not.”
To me, leveraging is not only about building wealth; More importantly, it is about creating freedom.
Different Forms of Leveraging
How well you learn to leverage will dictate how much freedom you can have in your life.
Here are various forms of “leveraging”:
1) Other People’s Time (O.P.T.)
2) Other People’s Money (O.P.M.)
3) Other People’s Knowledge (O.P.K.)
4) Systems (including technologies)
Now, before you hate me and start thinking that Leverage is Evil (you mean I have to use other people’s time, money or knowledge?!), I promise you that as you read along, you will discover that Leverage is not only good for you; but in fact, many of you have already been doing it every day and in many different ways.
In most cases, leveraging creates Win-Win and is beneficiary for all parties involved!
An Employee Has Little or No Leverage
You may not realize this, but if you are in a job today, your Employer is leveraging on you.
Your Employer is giving you a pay check, so that he can leverage on your time (Other People’s Time) and he can get more done with less of his own time.
Nothing wrong with that, most people have a job and the Society does need people to contribute in many different ways.
My point here is just to help you realize that “leverage” is indeed used everyday, everywhere.
Now, as an Employee, more often than not, you don’t have any leverage. If you do, you have very little. You will need to be trading your own time day in and day out in exchange for a pay check. Even if you are a Manager and have a team you are supervising, chances are that you still need to be in the office or working for certain hours a month to maintain your salary.
TIME is the most valuable resource in the World. If you lose your Money, you can always make it back. But if you lose your TIME, you can never make it back. Period.
So I cherish TIME – I want to spend my time doing things I love and with the people I care about.
It is no wonder John D. Rockefeller, a great American businessman and philanthropist said,
“I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.” – John D. Rockefeller
If you are working in a job today AND you agree that TIME is the most valuable resource you have, then you may realize that being an Employee with little or no leverage is probably not such a smart thing to do.
My suggestion for you then, is to start looking for ways you can leverage so that you can have more Freedom back in your life (some examples below…)
But… I’m Self-Employed?!
If you are Self-Employed – such as a Real Estate Agent, a Doctor that runs his own clinic alone, a Lawyer or Accountant that runs his own office or a Small Business Owner, you often have even less leverage than a regular Employee.
In most cases, you are the one handling every aspect of your business – defining business directions, business development, meeting with clients, handling logistics, delivering products, closing sales, marketing, and handling accounting just to name a few. Chances are that you are working even longer hours than a regular Employee. Not only that, your income stops when you stop work and you don’t even have paid vacation days.
If you found that you are in this situation – again, my suggestion for you, is to start looking for ways you can leverage more so that you can have more Freedom back in your life (some examples below…)
Real Life Examples
If you just look around, you will find that examples of Leveraging is indeed everywhere – the difference is whether you recognize it and if you are using it. Let’s take a look at some real life examples.
(1) Leveraging On Other People’s Time (O.P.T.)
- A Real Estate Broker provides training and support to a Real Estate Agent; and in return, get a percentage of what the Real Estate Agent produces
- A Business Owner pays a salary to hire a Staff, and in return, leverage on the Staff’s time
- A Financial Planner recruits team members and provides them with training and support; and in return, get a percentage of what her team produces every month
- A Woman hires a Cleaner so she can spend less time cleaning on the weekends and spend more quality time with her children
- A Couple hires a Wedding Planner to arrange their wedding, so they can spend less time stressing out about their wedding arrangements
- A Network Marketing leader provides support and training to her downline distributors, and in return, get a percentage of what all her distributors produce
- A Business Owner in Canada hires a Virtual Assistant in the Philippines so things can get done while she sleeps at night
- A Couple hires a Baby Sitter to look after their children one night a week, so they can go on a Date Night
As you review these examples, I’m sure you begin to understand that Leverage does make sense. Like I said, Leverage is the action of getting more done with less and in return, all parties benefit.
(2) Leveraging On Other People’s Money (O.P.M.)
- Getting a mortgage from a Bank in order to buy a house; in return, you agree to pay a certain interest to the Bank
- Raising funds from Investors such that a business idea can be executed; in return, the Investors receive a percentage of the profits
- Raising funds from Investors such that a development project and buildings can be completed
- Your Parents lending you money such that you can finally put a downpayment to purchase your first home
- A sophisticated Investor receives a loan from a Bank to purchase an apartment complex
- A sophisticated Stock Trader borrows money from a Broker to do margin trading
When it comes to investing, the ability to leverage on Other People’s Money can help you to accelerate your goals. However, be sure you understand the difference between An Asset and A Liability (click HERE) and that you have the financial knowledge to invest properly.
(3) Leveraging On Other People’s Knowledge (O.P.K.)
As Robert Kiyosaki has said, “Business and Investing are team sports”. It is impossible for us to learn everything in the World, so it is important to leverage on the right individuals and build the right team.
- Having a great Attorney, Accountant, Real Estate Agent and Tax Advisor on your team when you start investing in Real Estates
- Getting coached by a Mentor who has achieved what you want so you can learn from her experience and accelerate your success
- Consulting a Specialized Doctor to cure certain illnesses
- Taking a Value Investing class from an experienced mentor so that you can learn to invest in the stock market properly
- Building your Network Marketing business by following a successful upline leader who has done what you want to achieve
- Reading books on the topics you want to understand more on
- Participating in a Mastermind Group so that you can network and learn from people who are successful and have similar goals
In fact, the fastest way to learn is to follow someone who has already done it and is successful. By leveraging on someone’s experience and knowledge, you can drastically cut down your learning curve and achieve your dreams much sooner.
(4) Leveraging On Systems (Including Technologies)
We are now in the Information Age – whether we like it or not, we have to admit that the Internet is very powerful – it is connecting people, sharing information at the speed of light and creating many new millionaires each year.
- A Business Owner purchases a Franchise Restaurant (e.g., McDonald’s) so that the system and branding is already in place
- A Stay-At-Home-Mom starting a blog about gardening and turning it into a full-time income from the comfort of her own home
- An Online store reaching customers worldwide 24 hours a day, 7 days a week, 365 days a year
- A person with no prior business experience creating a full-time income in Network Marketing by following its proven system
- A Professor sharing valuable teaching to thousands of students around the globe at the same time using Webinars
- An Internet Marketer set up an online campaign and able to travel the world for 1 month while her business continues to grow
As you read through these examples, I believe you will begin to understand why successful and rich people leverage.
It is about delivering more value, working smarter instead of harder and creating Win-Win relationships.
I hope this posting has helped you to understand the power of leveraging and be more open to start leveraging more. By leveraging properly, you can create more Freedom in your own life.
If you have found value in this posting, please ‘like’ this and also ‘share’ this with your friends and loved ones so that they can start to learn how the successful and rich think, and help them gain more freedom back into their lives too.
To your freedom,