Never Spend the First Dollar
If you're living off the money from your job, it probably feels paycheck-to-paycheck, and it's not that the paycheck’s not big enough, it's just that you're spending it wrong.
In chapter 5 of my book Mindset To Millionaire, I talked about the difference between what I call the first dollar and the second dollar. In fact, the chapter is called “Never spend the first dollar” and I outline the difference between what I call massive income versus what I call passive income.
Massive income, or a first dollar activity, is something that pays you once. You go to work for a day, you get paid for that day, but that is the only time you will get paid for that day. That money doesn't come in monthly because you worked back on January 15th. It's the same with some investment categories, for example, a fix and flip. You do the project once, you get paid once. That's a first dollar activity; that's a massive income activity.
But then there's a different category, there's what I call second dollar activities or passive income activities. These things are activities or assets that pay you over and over and over again. So, when I say never spend the first dollar, what I mean is not to quit your job, or don't do first dollar activities, those are important. While you're actively working, while you're not in retirement status, you should be doing first dollar activities.
But the idea behind this premise is take the money from the first dollar activities and buy second dollar activities with them. Maybe start a business that you know the customers pay a subscription, then you will get paid every single month for a single action. Or maybe buy a rental property that's a great investment. A rental property is something that will pay you on an ongoing basis for something that you purchased once. So take your money from your first dollar activities, buy second dollar activities with it, and live off the cash flow from the second dollar activities.