We were programmed to save money from a young age. In primary school we were given a little piggy bank to collect our coins ‘for a rainy day’.
We were taught how to save money, not how to make money. This saving mind set has been taken with us into adulthood. We constantly find ways to save our money, Woolworths points, fuel vouchers, EOFY sales.
We are taught how to minimise tax, not how to create wealth. School doesn’t teach you how to make money. We pull all the strings to reduce how much we pay in tax. We pay our accountant to minimise tax but we never pay anyone to teach us how to create income.
What happens when we minimise our tax? We pay less tax right? Great!
But now the bank won’t lend us money because our income is low. We have cut out our ability to MAKE money because we were too busy SAVING money.
I’m going to teach you three wise words that the face on the US $100 note, Benjamin Franklin, taught me:
Money Makes Money.
We borrow money from a lender, invest in assets using leverage and wait for the assets to grow in value and produce an income so we don’t have to work for it. To borrow money we need to prove to the bank that we have a strong income.
Much to my accountant’s disappointment, I don’t try very hard to minimise my income through tax deductions. I pay more tax, but now I can purchase that property that has since grown 30% in value.
I’m not saying go out there and pay notax, but if you are in the accumulation phase of your property journey, then talk to your broker, your accountant and your buyer’s agent about what you want to achieve financially and align your finances to allow you to achieve your goals.
You see, money makes money. To become financially free you need a money making mindset, not a money saving mindset.
