Money Usage

 The building blocks for financial wealth start with the financial decisions that you make today....

In Order to Become a Successful Real Estate Investor You Must First Think Like an  Investor

The most powerful model for understanding the usage of money and the key to building  financial wealth is a model called the Money Matrix. The matrix explains how the way that you think about money and the way that you consume money right now  is directly correlated to your ability to gain financial wealth. The question that you will ask yourself by the end of this post is if you are a " Consumer" or a " Investor."

There are two pyramids in the money matrix- one that is pointing up and the other pointing down. These pyramids  reflect the contrasting financial priorities of investors vs. consumers.

The essential difference between the two is the importance they place on the four roles of money:

Capital- money invested in anything expected to grow value

Cash Flow- money generated from those investments

Cash- money held in reserve for security or future investments

Consumption- money spent on anything not expected to grow in value

Investor build their financial lives on Capital, while Consumers build their financial lives on Consumption. - Gary Keller The Millionaire Real Estate Investor  

Investors think about money in a totally different way that consumers. Investors understand that you do with your money in the beginning will dictate what you will be able to do in the end. Investors don't spend their money on keeping up with the latest trends or the latest technical gadgets. Investors use their money to invest in ventures that have the potential to make them a profit. Investors apply this to their entire life. If something does not have the ability to make them more productive or create a profit for them, they don't consume it. Investors see money as an opportunity to invest, consumer see money primarily as an opportunity to spend. Consumers at best save money for security while investors save money so that they can make more investments. Investors are always thinking about the next step to grow their portfolio.

When you invest in capital first,an amazing thing happens: Slowly but surely your  money starts to work for you. Amazingly, your money is now making you even more money. And each year, as you invest more of your income in Capital, the cash flow it creates grows in significance. - Gary Keller The Millionaire Real Estate Investor

So ask your self: " Am I an investor or am I a consumer?"