Lecture Notes: How the Wealthy Use Money Differently

Introduction

• Wealthy individuals use money differently, not necessarily working harder.
• The wealthy use the same dollar multiple times, unlike most people.
• Lecture aims to teach how to stack wealth like the top 1% using specific strategies.

The Traditional vs. Wealthy Financial Mindset

Traditional Model

• Go to school, get a job, save for retirement over 40 years.
• Many Baby Boomers are retiring with insufficient savings.
• The traditional model locks money in single investments (e.g., stock market, real estate).

Wealthy Mindset

• Money is used to buy assets, which then fund living expenses.
• Money is put to work in multiple places simultaneously.
• The wealthy use credit as a cheap source of funds, not out of necessity.

Three Money Mindsets

1. Poor Mindset

• Money is for survival; all income is spent immediately on necessities.
• Reliance on credit creates a debt cycle.

2. Middle Class Mindset

• Focus on comfort; income increases lead to proportional lifestyle inflation.
• Credit is used to enhance lifestyle rather than build wealth.

3. Wealthy Mindset

• Wealth is built by making money work through investment in assets.
• Use of credit is strategic, allowing for asset acquisition and further wealth creation.

Lessons Learned from the 2008 Financial Crash

• Personal story of losing wealth in 2008 due to market collapse.
• Lesson: Avoid over-leveraging; instead, build wealth in layers and use leverage correctly.
• Importance of continued education and learning from mistakes.

Wealth Building Strategies

Stacking Assets and Money Multiplication

• Wealth is built by stacking assets in layers:
  1. Foundation: Liquidity (e.g., cash value life insurance)
     • Compounds tax-free and allows borrowing without growth interruption.
  2. Real Estate: Provides cash flow, appreciation, loan leverage, and tax advantages.
  3. Bitcoin: A high-growth, scarce asset with borrowing potential.

Example: Wealth Building through Layers

• Start with a high cash value life insurance policy.
• Use the policy to fund real estate purchases, leveraging tax advantages.
• Further invest in Bitcoin and continue to layer investments.
• Compound growth through strategic reinvestment and leveraging.

Wealth Engine Assessment

• Tool to evaluate and optimize the jobs your dollars are doing.
• Helps identify gaps in current wealth building strategies.

Conclusion

• Wealth building isn't about working harder but using money effectively.
• The wealthy continuously layer and compound their investments.
• Free resources such as the Wealth Engine Assessment are available to assist in building a personalized wealth strategy.
• Key takeaway: Start stacking, keep compounding, and continue learning.