Tag Archives: Leveraging Money

How To Use What Little Money You Have To Build Wealth

Everyone wants more money. For some people it is just a desire to have more and do more. Money is a tool which can give people a better life. It can enable people to do more and have more freedom.

Unfortunately, there are a lot of people who need more money than what they currently have. It isn’t a mere desire to have and do more, for some people, they simply want a life with a little extra peace of mind.

They don’t want to simply exist and live a life where they have nothing left once the bills and expenses are all paid. They want to buy the odd luxury item and do some leisure activity without it being a constant internal discussion whether they can afford it or not.

They want one day where they can simply spend a fiver and know that it isn’t going to be incredibly detrimental to their lives. Every pound spent on something which is not a necessity is pushing them closer to having bailiffs banging at the door.

Having little spare money is a nightmare. Especially when money is the best tool to use to get more.

Wealthy people are wealthy because they mostly leverage what they have. It is said that poor people save for a rainy day and wealthy people invest for the future.

Wealthy people buy money.

A great example of buying money is the story of the guy who sat near to the bus stop for one of the busiest bus routes in Havana, Cuba. The bus company would not give change, if you didn’t have the exact change which was – at that time – 40 cents, you either lost 60 cents or didn’t ride the bus.

Most people who needed to use the bus had 1 peso notes. They needed to ride the bus, but they didn’t want to lose 60 cents. The guy who was sitting near the bus stop had a tin full of coins and he would buy 1 peso notes from the people wanting to ride the bus for 80 cents.

The soon-to-be bus passengers got the exact change for the bus and instead of losing 60 cents they were only 20 cents down, and the guy who was  buying the money was making 20 cents on every transaction.

He was a middleman business if you like. He was  making his money by helping people to save money and to get home. I imagine the bus company were not happy about it as they were missing out on a lot of income they were stealing from their passengers but that is a different story for a different day.

That guy was leveraging the money he had. He took all of his coins and swapped them for notes. He didn’t pop any spare money he had into a tin and hid it under the bed for a rainy day, he was using it to grow it.

Money grows when you use it. Obviously, you can lose money if you invest in the wrong things or something bad happens, but that doesn’t mean that you should fear using your money and not use it. If that was the case then Warren Buffett would not have become a billionaire.

When Warren Buffett was a young man, he was the polar opposite to his friends. Where they were buying the latest flash car on HP and spending what was left of their wages on wine, women and song. Warren was using his spare money to buy up stocks and shares.

I am sure that not every purchase or deal he has made in his life has been successful, I am more than certain that he has lost money at some time or another, but what is evident is that over the long run, using his money to buy money has paid off big time. 

He is incredibly wealthy and that is all down to his decision to leverage the money he had spare and not squander it on things which at the time would have been fun but in the long run would have been detrimental to his life.

Buffett could not see any logic in spending what little he had left on things which were not bringing anything back. Once rent and living costs were covered, the idea that his friends spent virtually the rest of their wages on a car which was depreciating in value, required ongoing costs such as fuel and wasn’t theirs until they had paid over the asking price for it made no sense to him.

It was a similar story with Roman Abramovich, he too decided to spend whatever money he had left out of his wages to buy stocks in the company he worked for. He was working in an oil field with his friends. Over the years, Roman kept buying shares until one day he was the major shareholder and the owner of the company.

As I am sure you know, Roman Abramovich is a billionaire. He is currently worth between 12 – 13 billion dollars. Not bad for a guy who decided to use his spare money to buy stocks and shares. If he and Warren Buffett had feared losing their money, their lives would be a lot different today.

Fear of losing money is understandable, but it also stops people from growing a large pot of money. Money is a tool with which you buy money in many different ways. But essentially, all that you are doing is buying money.

Whenever you buy a physical product at £5 and sell it for £7, you are making £2 per item. 

When you pay someone £30 to write an article for you which you sell to a website owner for £100, you have made £70.

When you pay someone £5,000 to write a sales letter for you which generates £50,000 in profit from extra product sales you have made £45,000. 

Whatever it is that you buy to sell or whatever service you pay for to help earn money, you have bought money. However you want to look at it,  spending money is simply buying money back. Money is the tool you use to make money. To make more money and to become wealthy, you must leverage money.

If you have little money to spare then you need to really sit down and work out what is the best use of that money, and also figure out other ways to increase your pot of spare money. 

I remember reading about a guy who saved over £350 by not buying drinks at work. Not once did he buy a drink from the vending machine in the factory he worked at. Instead he made drinks using the free water, kettle and kitchen area which was also provided by his place of work.

He would only drink black tea and because he didn’t have it strong, he would get two drinks out of each tea bag.

His cup was that big that it would accommodate two drinks from the drinks machine. With each drink costing £0.20 from the vending machine. He worked out that a £11 box of tea bags made the same amount of drinks that would have cost roughly £350 if bought from the vending machine.

The cost of those drinks from the vending machine was a week’s wages. He would have had to work a full 40 hour week to earn the money to pay for the same amount of drinks had he bought them from the factory drinks machine. Most of the guys in the factory bought their drinks. 

With that £350 saving, he was able to put the money to good use like investing in shares, or an online course, or buying stock to sell for a profit. He might have used it to help fund a much needed holiday  instead 

The point is, he saved a stack of money by not doing something which couldn’t have been a different way. He didn’t sacrifice not having a drink throughout the day, he still enjoyed big mugs of tea. He just didn’t pay over the odds for the privilege. There are a lot of things that people can do which can help free up a lot of money which can be put towards something better. Money that can be leveraged to build a bigger bank of cash.

Without money, you are not going to make money.

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The S&P Siphon System