HomeMoney & WealthWhat is Leverage? How Rich People use Leverage?

What is Leverage? How Rich People use Leverage?

Leverage – It always fascinates me what separates the rich from the poor and the middle class. 

So what’s the difference between someone who is living on the street and someone who is living in a big house and making a lot of money? I am sure everyone’s got a story. But what is the difference between someone like that versus someone who’s making millions or tens of millions of dollars?

We all have 24 hours a day, we all have the same opportunity. 

Is it education, is it their background, is it because of luck, is it because of hard work?

No, it’s none of those things, it’s none of those things. I believe what truly separates the rich from the poor and the middle class is one word, leverage. 

Rich people use leverage and poor people don’t. Now there are many many forms of leverage. Let’s first define what leverage actually is.

Leverage Moneyexcel

What is Leverage?

All it means is leverage is getting something done with less effort.

Just like a lever, right? You can use less, the least amount of effort to lift something very very heavy.

That’s all that it means, using leverage. So there are many many forms of leverage. I am going to share just a few of those along with how rich people use it.

How Rich People use Leverage?

#1 OPT – Other People’s Time

The first form of leverage is OPT, other people’s time. Rich people know how to use OPT, other people’s time.

For example, a CEO hiring employees, he is leveraging other people’s time to perform certain tasks for the organization.

Example for me, I have people coming to my home for cleaning work, I am using other people’s time to help me do tasks. It may not be something I enjoy to do, it may not be something that is worthwhile for me to do just because my worth and rate is much much higher. So, that is the use of others people’s time – OPT.

#2 OPK – Other People’s Knowlege 

The second form of leverage is other people’s knowledge. Because as a person, you can only do so much. You can only learn so much, you can only know so much.

To grow with the, if you want to grow your income, rich people you notice, they have a lot of advisors around them in all areas of their lives like health, finance, spirituality, etc.

For example, most of us ask our CA how to reduce taxes. How to do tax planning? Few of you also seek help from a financial planner for doing financial planning.

Rich people are surrounded by people that are smarter, and that have specific knowledge.

No different than running my business if I need someone to help with, let’s say, with YouTube or with Facebook or with Instagram or whatever it is, doesn’t matter.

That I bring in the best of the best, I hire them maybe sometimes as a project manager, sometimes as a consultant, independent consultant.

But I am paying them for their knowledge. So I’m leveraging other people’s knowledge.

People who have been there and done that, versus poor people, you notice they don’t read books, they don’t hire people, they are rugged individualists.

They take on everything on their own. You know what, you want something done, you do it yourself, right?

That’s a poor person mentality. So that’s the second form of leverage.

#3 OPM – Other’s People Money

The third form of leverage is other people’s money. Rich people are very very good of utilizing and leveraging OPM, other people’s money.

They buy a piece of property, they put a down payment, and they borrow from the bank to buy an investment.

An entrepreneur maybe they’re going through the first round of funding, they are raising capital from investors, that’s other people’s money.

Rich people, we don’t use our own money. Only poor people use their own money.  

There’s an infinite amount of money out there that’s floating around.

But people don’t know how to multiply, how to use it. Money goes to people who know how to multiply.

And that’s why it’s easy, it’s easy for rich people. Not only do they have a track record, but it’s once they know how to multiply, it’s easy for them to attract more money to make more money.

And that’s why you do see the rich do get richer. You can bitch about it.

You can say how come it’s not me, poor little me. Or you can say, you know what, this is how the game gets played.

  • What are the rules of the game?
  • What are you can learn?

So that’s number three, the third form of leverage, other people’s money.

#4 OPR – Other’s People Relationships

And the fourth form of leverage is other people’s relationships. Wealth comes from relationships. And rich people are very good at leveraging relationships.

For example, there’s an important person I need to meet. Maybe I don’t know that person, and would ask my friend, hey can you make an introduction?

Can we do some business together? I will give you another example,

let’s say you have an offer, you have a product, a service that you’re promoting and you want to leverage other people’s relationships, OPR,

you would maybe do a potential joint venture with someone else who already has an existing customer base.

That customer base trusts and believes in that particular person.

You can have that person, the influencer, and throws your product, your program, your service and there you’re leverage the relations he has built for years with his customer base.

And there, if he promoted your products, you will be more than happy to give him a commission, in our world it’s called the affiliate commission.

That’s leveraging other people’s relationships. So all these are different forms of leverage. I’ll give you one more, also technology.

#5 Technology

Rich people also leverage technology, automation, and software, right?

All these tools that are out there, that can, AI nowadays, that could help you to be more efficient, more effective that rich people also utilize.

So technology, I believe it’s a huge part of leverage. Even your smart phone, right? The smartphone that you have, the different apps that you have is all those, many forms of leverage.

So think about it, it doesn’t matter what business. It doesn’t matter what industry, it doesn’t matter what investment they do.

What it boils down to, is you study and you look at every single rich person,

they are masters of leverage, in some way, shape, or form.

The more you know how to utilize that, the more successful you’ll be.

And the more you know how to utilize the leverage the more successful you’ll be and the wealthier you’ll be.

I’m gonna leave you with one quote by John D. Rockefeller – I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.

Think about it.

Shitanshu Kapadia
Shitanshu Kapadiahttp://moneyexcel.com/
Hi, I am Shitanshu Kapadia founder of moneyexcel.com. I have written 1880+ articles on this blog. I am PGDBA(marketing), engaged in blogging for 10 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. The purpose of this blog is to spread financial awareness and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.
RELATED ARTICLES
error: Content is protected !!