Pillars of Wealth

david m. greene, pillars of wealth, how to make, save and invest your way to financial freedom financial freedom is a dream for many that's achieved by few.

inflation steadily erodes purchasing power, while stagnant wages fail to keep pace.

despite scrimping and saving, the treadmill of work to earn to spend goes on forever.

many people think they lack the luck or genius needed to build substantial wealth before retiring.

but the formula for breaking free exists.

imagine replacing the rat race with passive income to fund your passions.

through real estate, financial freedom lies within reach, without the need for crazy luck or complicated maneuvering.

in this chapter, you'll learn an easy-to-execute plan that only requires you commit to a few proven principles.

by merging defensive saving maneuvers, offensive income boosting and strategic property investing, you'll learn the foundations for building wealth through real estate.

so what are you waiting for?

let's dive in.

building a foundation – the right mindset and goals financial wealth is just one aspect of overall wealth and well-being, but it's the one that gives you freedom and security and allows you to help others and pursue your passions.

like getting healthy or learning a skill, building wealth takes practice and strategy, but it starts with two key concepts – net worth and cash flow.

net worth is the total value of what you own minus what you owe.

you can calculate it easily by tracking assets like property and investments along with liabilities like loans in a spreadsheet.

cash flow is the income you get from these assets minus related expenses.

positive cash flow is what gives you financial freedom.

pretty simple, right?

rather than a get-rich-quick scheme requiring luck or genius, the author's approach to building wealth is accessible to anyone who commits to three pillars of wealth – defence, offence and investing.

defence involves protecting the money you earn by saving it and controlling your expenses.

offence increases your income both through increasing your salary and any income from assets like rental properties.

investing means leveraging savings and income to acquire assets, especially real estate, which generate further income and opportunities.

misconceptions about money, like seeing it as the sole source of happiness, security, evil or mystery, can inhibit wealth building.

really, money, real estate and other assets are simply tools for achieving life goals.

setting the right goals based on personal values provides motivation during challenging times.

building wealth may not be easy, but it's simple with the right knowledge, habits and the determination to follow the three pillars of wealth.

anyone willing to practice this patient approach can attain financial freedom.

take some time to think through your motivations for building wealth because getting clear on that is important for maintaining momentum on your financial journey.

once that's done, we can move on to the first pillar – defence.

the first pillar now that you're clear about your motivation for building wealth, you can shift focus to tangible financial strategies.

defence protects existing income, while offence increases it.

both work together to accumulate capital for investing.

let's dig into what defence looks like first.

with a regimented budget, you can maximise savings and limit unnecessary expenses.

this requires analysing your current spending, distinguishing your needs and wants, setting savings goals and tracking your progress.

expenses fall into three main categories – essentials or needs, discretionary lifestyle expenses or wants and debt payments.

reducing or eliminating expenses in the wants and debts categories frees up cash for savings.

contrary to widespread advice, you're better off saving on bigger expenses rather than small ones like a daily latte.

consider this – if you give up a $5 latte, even if you have one every day of the month, that's only about $150 per month.

but if you eliminate your housing payment that could be thousands of dollars a month saved, that's a huge difference.

it's also important to prevent lifestyle creep, which is when you receive a pay raise and instead of saving the entire thing, you let your expenses increase and use all of the raise for spending instead of saving.

finding satisfaction in frugality can make saving easier.

try changing your mindset from thinking of yourself as a spender to thinking of yourself as a saver and your habits will more easily transition as well.

specific defensive steps include opening separate savings, checking and emergency fund accounts, consistently depositing into savings first belt stability.

you can craft strategies, games and standards for yourself to help save.

when the author was a college student, he lived at his parents' house, ate at home and only bought clothes on sale.

the strategies and games he set for himself allowed him to save $100,000 before he graduated college and that was before he had all the experience and knowledge he does today about building wealth.

some of the strategies the author implemented were to work all the shifts he could as a server and at the best possible restaurant.

another example would be to deposit $100 every week in your savings account and find ways to make up the difference if you're unable to meet your standard one week for whatever reason.

you could also set yourself a minimum number of hours you work in a week or another metric you can control.

the game part comes from seeing if you can exceed the standards you set.

although it can be tempting to treat yourself or spend increased earnings, green advocates investing those earnings rather than spend them all.

as savings grow through compound interest, small initial gains accumulate exponentially over time like a rolling snowball.

tracking this progress helps motivation.

turning saving and budgeting into a kind of game adds satisfaction in meeting self-set goals.

of course, you can't hold a roof up with one pillar and this goes for the pillars of wealth too.

so let's move on to the second pillar, offence.

have you ever seen anyone win a game merely by playing defence?

sure, there are games out there where defence might be the best strategy but in most points-based competitive games, you need a good combination of defence and offence to win.

the same is true for building wealth.

maximising offence requires focusing talents and efforts towards solving problems to become more valuable professionally.

consistently seek feedback to pinpoint areas for growth then devise deliberate practices to improve any of your areas of weakness.

take on more responsibilities before being asked, proving your competence and dedication.

also, try to make professional connections at each job since former colleagues often become future employers or clients.

studies reveal wealthy people constantly see fresh opportunities to profit.

they tirelessly work to develop skills to capitalise on these opportunities when they come up.

in contrast, average income earners rely on past accomplishments rather than future potential.

to join the ranks of high achievers requires embracing constant self-improvement.

it takes substantial effort but brings ample financial rewards.

since truly fulfilling work is rare, most people need to find purpose in family, community service and hobbies instead.

but a job can still be satisfying if you focus on mastery and learning transferable skills rather than just earning a wage.

start small by adding value in your current roles then lobby for promotions by demonstrating readiness for advanced positions.

in terms of job types, sales roles bring higher pay at the cost of stability while operations roles provide reliable paychecks rather than peak earning potential.

if you're wanting to accumulate wealth, it makes sense to aim for sales roles.

the end goal in a fence is transitioning from employee to entrepreneur.

cultivating leadership instincts, initiative and a sense of ownership prepares you for eventually working independently.

imagine running your own show, even while you're answering to bosses.

make improvements without being told.

learn as many hard and soft skills as you can to ready yourself for self-employment.

little hacks to boost productivity include planning ahead, starting days with exercise, visualization and tracking progress.

but above all, try to fall in love with the process of continuous personal growth itself.

the third and final pillar, investing.

now you've defended the money you earn through saving and expense cutting and you've implemented offensive techniques to maximise your income.

it's time to learn investing strategies to convert those earnings into assets for passive growth.

the author focuses on real estate investing because it has enormous wealth potential that's largely passive if approached in the right way.

let's find out how.

just like cooking from a recipe, you need the right mix of ingredients to be successful in building wealth through investing.

these include capital, knowledge, results, time and leverage.

the first thing you need is enough funds or capital, enough for a down payment and closing costs on a piece of real estate, for rehabilitating the real estate and for the upkeep of the real estate.

you need knowledge about the specific ways to build and maintain your growing wealth.

you also need to analyse the results of your property and purchases to understand if they're doing well or not and why they're performing that way.

and you need time for compounding interest to work its magic, your real estate's value to appreciate and the debt on your real estate to decrease with payments.

while no income source is 100% passive, real estate done well demands far less effort than salaried jobs.

some of the top ways to make money in real estate include forcing equity, leveraging natural equity and forcing cash flow.

forcing equity is when you improve the quality of the real estate you bought in some way, increasing its value.

leveraging natural equity is when inflation causes real estate prices to increase, increasing the value of your holdings.

and forcing cash flow is when you either decrease the money needed for a piece of real estate's upkeep or increase the money the property generates, thereby increasing the property's overall cash flow.

for example, you might renovate the kitchen in a rental property, increasing the rent you can charge for it.

another strategy is buying undervalued properties by targeting aesthetically unappealing homes in nice neighbourhoods.

minor cosmetic upgrades radically boost curb appeal and market value.

natural inflation and rising rents over time passively increase cash flow.

continuing your education is also essential.

seek out podcasts, books, online forums and meet-ups centered on real estate.

for beginners, focusing on residential properties to live in or rent out builds investing chops before expanding into more complex real estate strategies.

as experience develops, your portfolio can scale up across property types and classes.

the key to building your net worth is converting defensive savings and offensive earnings into assets that self-perpetuate growth.

with the right property strategies guiding investment, the three pillars will stand strong as your foundation for building wealth.

the main takeaway of this chapter to pillars of wealth by david m. green is that you can build your net worth by following the three pillars of wealth – defence strategies, offensive tactics and wise investment choices.

defensive strategies focus on budgeting, saving and limiting spending.

offensive tactics increase earnings through expanding skills and advancing professionally.

investments compound income from real estate assets, which appreciate over time and produce passive income streams leading to financial freedom.

by building a solid foundation of fundamental knowledge, practising patience and discipline and staying motivated during challenges, anyone can systematically construct wealth with this easy-to-understand but hard-to-execute framework.

the key is merging defensive moves, offensive manoeuvres and savvy investing in real estate over the long term.

ok, that's it for this chapter, thanks so much for listening and if you can, please take the time to leave us a rating or a comment.

we always appreciate your feedback.

see you in the next chapter.