We have been looking at some key principles of financial success – becoming disciplined about budgeting and saving, being prudent about getting into debt, and setting and achieving smart goals. We have also discussed the importance of creating additional income to meet your basic money needs.

However, if you want to attain financial security and eventually become financially free, you have to move beyond just managing your money well and learn how to effectively multiply your money. You need to acquire new skills and techniques that can help you to create long-lasting wealth.

Understanding how to multiply money is usually difficult for most people because it involves changing long-held negative mindsets towards making money. Although many people say they want to be rich, they are really not willing to put in the hard work that’s required to learn how to do it.

Learning about wealth creation

Unfortunately, wealth-building is not taught in schools; the system educates students on subjects that can help them to become good employees, but there is generally little focus on developing strong entrepreneurial or investing skills. To learn about making money, you primarily have to turn to experts who have the experience.

In Rich Dad Poor Dad, entrepreneur Robert Kiyosaki revealed some of the wealth principles that rich people taught their children. T. Harv Ekers advised in Secrets of the Millionaire Mind about how to create a wealthy mindset. Kiyosaki also provided insight into the sources of wealth income in Rich Dad’s CASHFLOW Quadrant.

In CASHFLOW Quadrant, Kiyosaki outlined that there are four ways to earn an income: as an employee, self-employed person, business owner or an investor. To become more financially secure, he advised, employees and self-employed persons need to become more educated about business and investments.

It’s not enough to excel at the technical aspects of the job you do, you have focus on learning how to make money work for you. Employees who depended solely on a job income were at a disadvantage, Kiyosaki declared, as it was not their bosses’ duty to make them rich. “It is your job to become rich, if you want to.”

In today’s challenging economy, it is even more important to make financial education your priority, by committing time and effort in this direction. Most people waste precious hours every day that could be spent learning about wealth creation. Kiyosaki advised, “The only difference between a rich person and a poor person is what they do in their spare time.”

Moving towards financial freedom

Kiyosaki recommended that employees and self-employed persons who wish to achieve financial freedom should initially look at earning income from a business system before focusing on serious investing. “If you first develop a solid business sense, you can then become a better investor.”

In addition, owning a business system can give you excess cash flow and time to devote to creating wealth through investments. Many employees and self-employed persons are “tight on cash, and cannot afford to take any kind of financial loss,” Kiyosaki asserted. “If you lack both knowledge and capital, it’s financial suicide to become an investor.”

However, being a business owner is not the same thing as being self-employed. Kiyosaki explained that self-employed people own a job, while business owners own a system and have other people work the system for them. Unlike self-employed persons who have to work to earn, the system is what makes money for true business owners.

Once a business system is up and running, if it is properly operated, Kiyosaki maintained that it will provide a steady stream of income without much physical work effort from the owner. A business system must be strong enough so that the owner doesn’t need to be an integral part of the system. This is key to the owner’s ability to attain real financial freedom.

Choosing a business system

There are three main types of business systems that you can participate in, Kiyosaki pointed out. In a traditional corporation, you have to develop your own system; a franchise allows you to buy an existing system; and network marketing gives you the opportunity to buy into and become a part of an existing system.

If you would like to create your own business system, Kiyosaki advised that it would be best to get an experienced mentor or spend several years working in a profitable business, learning all the different aspects of its operation. This is not an easy process, as it “requires a lot of trial and error, up-front legal costs and paperwork.”

If you have sufficient capital to buy a franchise, this allows you to immediately own a “tried and proven operating system.” Kiyosaki explained that this gives you the time to focus on developing the people who will run the system successfully without you. However, the average person doesn’t usually have the financial wherewithal to purchase a franchise.

If you want to participate in a lower-cost business system, then network marketing might be the solution. These operations remove the problems of creating accounting, distribution and other procedures needed for a new business. Kiyosaki noted that good networking companies provide you with quality education and are interested in helping you to succeed.

Success as a business owner takes time, effort and a willingness to learn from failures. Despite the challenges, owning a business system can be a satisfying way to create wealth.

If you wish to find out where to get the financial books being recommended, please email cherryl@financiallysmartonline.com

Cherryl is a financial consultant, money coach and founder of Financially S.M.A.R.T. Services. Her first book, “The 3 Ms of Money” will reveal all the secrets she learned about financial success. Get more practical advice at www.financiallysmartadvice.com and free tools at www.financiallysmartonline.com.