Making Money

How To Make Money With Your Extra Cash

“It takes money to make money.” Have you ever heard that one? What exactly does it mean to make money with money?

Investors know that you can buy things that make you richer. I’m not talking about private jets, big screen TVs and expensive cars. Those things make your poorer.

In order to make money with the money you earn from your job, you must buy things that make you richer. And it helps if those things also put cash in your bank account every month.

I’m going to get into a little money philosophy in this article, so if you’d rather skip that, then I’ll just say I recommend putting your money into:

  1. Dividend stocks – They are passive, easy (cheap) to get into, and will put money in your pocket a few times every year.
  2. Real estate – Kate and I make over $60,000 per year from three properties listed on Airbnb and a triplex with three long term tenants.
  3. Business – We are also starting to get into the online business world where you can consistently get 30% cash on cash return (pay $100,000 to make $30,000 per year in cash flow).

But if you’d like to know the difference between how the rich spend their money and how the poor spend their money, keep reading.

Purchases That Make You Poorer

Most people have only ever bought things that make them poorer, and they don’t even realize it!

The only thing the average person has ever bought that makes them richer is their retirement account. But when most people retire and have to use their retirement fund to survive, it is no longer making them richer. We’ll come back to retirement accounts, but for now I want to talk about some of the things regular people purchase that make them poor.

And one of these you probably thought was making you rich.


Buying a car makes you poorer, and if you take out a loan to buy that car it’s even worse. Many people use their car to travel to and from their full time job, and in that regard, a car may be necessary, but it’s still making your poorer.

Your car is one of the expenses of the money you make from your job. Your job makes you richer, your car makes you poorer.

Let me show you why.

Here’s your best case scenario. You buy a used car for $8,000 and you pay all that money up front. You don’t take out a loan.

You drive that car off the lot after purchasing it, and maybe it’s still worth $8,000. But next year, after spending hundreds of dollars in gas, hundreds or possibly even thousands of dollars in repairs, the car is only worth $7,000.

If you’d never bought the car you’d have $8,000. Since you bought the car you spent $8,000 and lets say $500 between gas and car repairs. Then you sell it for $7,000 and you end up recouping only $6,500 of your original $8,000.

Buying that car lost you $1,500. You’re poorer than you were before you bought it.

TVs, furniture, clothes, food, entertainment

Basically everything in your home is making you poorer. I’m not telling you to go to work naked or sit on the floor while you stair at the trees for entertainment. I’m simply trying to show you what makes a person lose money over time.

EVERYONE, even the rich, spend money on things that make them poorer. You have to buy food to survive, but buying food still makes you poorer.

TVs lose value over time just like cars. You’ll have less money a year after buying a TV, even if you sell it.

The same thing goes for furniture and clothes.

And there’s no way to make back the cost of food or entertainment. All these things make you poorer.

Your home

This one may be a bit controversial, but I can almost guarantee you that the place you live is making you poorer. And I’m going to show you why.

Let’s look first at anyone who rents their home, because most people will agree with this.

If you rent

If you rent you spend money on rent and utilities, and in return you get a place to stay, but the problem is there’s literally no way for you to make that money back. You’re just paying for a place to live.

Financially speaking, renting a house is far worse than buying a car or a TV, because you don’t have anything you can sell to make back your money. Literally every dollar you spend goes straight to someone else and you never see that money again.

If you own

Even if you own your house, chances are it’s making you poorer, just at a slower rate than the renters. And I’ll show you why.

Let’s imagine you put $10,000 down to purchase a $100,000 house. Let’s even give you good loan terms, a 15 year mortgage at 3% interest. This makes your monthly loan payment $622.

Let’s also say your utility bills plus internet adds up to $250 per month. You spend an average of $100 per month repairing and maintaining the house over time.

And lastly let’s assume your home appreciates in value by about 3% every year.

After 15 years, what happened?

You spent $175,000 on mortgage payments, utilities and repairs, plus $10,000 on a down payment. And you now fully own a house that is worth $156,000.

You spent $185,000 on a home now worth $156,000. You lost money!

Most people believe that their home is an investment, but I’m showing you that it’s a pretty poor investment. You lose money on it, at least until you pay off the mortgage.

Principles Of The Poor

There are some rules followed by the poor people of the world that are actually keeping them poor. Contrary to popular belief, it’s not the wealthy that are the biggest perpetrators of keeping poor people poor. It’s the principles taught in the poor classes.

Get the highest paying job

Getting a higher paying job doesn’t make you rich. All it does is allow you to buy more things that make you poor. More cars and TVs.

Getting a higher paying job doesn’t make you richer, it simply gives you more money to spend on things. And most people spend that extra money on things that make them poorer.

Get the best education

The middle and lower classes constantly preach how your college degree is the way to get ahead in the world and get that higher paying job.

This is partially true. In general, the higher salaried jobs require a degree, but there are also plenty of great jobs that don’t require a degree.

Again, higher paying jobs don’t make you rich, so a college degree can’t make you rich either.

There’s no arguing the importance of education in life, but your degree and your alma mater make little difference in your ability to build sustainable wealth.

Save for retirement

Saving for retirement is the only thing the poor believe that makes you richer, as long as those savings are invested. Typical retirement savings go towards purchasing stocks and this practice does make you richer.

Purchases That Make You Richer

I call an asset anything that makes you richer over time. As I wrote before, cars, clothes, electronics all make you poorer. Everyone makes purchases that make them poorer, but the difference between the rich and the poor comes down to how many assets they own.

Let’s take a look at some purchases that make you richer.


Stocks make you richer. Why exactly?

Because they grow in value over time, and there are no costs associated with owning them.

If you purchase a stock for $100 today and it grows by 5% each year for 10 years, then after 10 years that stock will be worth $163.

It doesn’t cost you anything to own the stock (until you sell, then you must pay taxes). If there are no expenses involved then you are $63 richer after those 10 years.

Investment real estate

I talked about how owning your home can actually make you poorer. But the home I live in is making me richer.


My wife, Kate, and I list our basement on Airbnb. So just like you, we pay a mortgage, utilities and repairs, but unlike you we collect money regularly by renting out our basement.

Let’s revisit the previous example and see how the numbers change.

We spent $185,000 over 15 years to purchase an asset worth $156,000, but what if you’re like me and you make $800 per month by renting your home.

You would make an additional $144,000 in cash in those 15 years. So I’m going to spend $185,000 over 15 years to purchase an asset worth $156,000 plus $144,000 in cash.

By turning my primary home into an Airbnb I’ll be $115,000 richer after 15 years!

You can do this same thing with real estate you don’t live in and create wealth over time.


Believe it or not, regular people like you and me can purchase businesses. Done wisely, you can purchase a business that will make more money than it spends every month, and grows in value over time.

Check out my article on return potential for business for a more detailed breakdown of how you make money by purchasing businesses.

Principles Of The Rich

There is a method to creating wealth over time that can be repeated by anyone. There are a lot of details to pick up on along the way, but you really only need to know one thing:

Invest some of your money.

Here is how to use the money from your job to start creating more money.

1. Set aside at least 10% of your income for investing

In order to make money, you almost always need to spend money on something. It costs money to buy stocks. It costs money to buy real estate and businesses.

You must save a portion of what you earn so that you can then spend that money on things that make you richer.

Kate and I save between 20-25% of what we earn to put towards our investments. I think 10% is a minimum.

2. Invest that money

As a cash flow investor, I prioritize real estate and business in my investments, because these investments put money in my pocket each month. But most investors make stocks a big part of their investing portfolio.

Here’s a list of investments that you can look into. I strongly recommend sticking to stocks, real estate and business, but you can make money with the other investments on this list:

There are opportunities to purchase assets (things that make you richer) everywhere in the world. It’s your job to cut through the crap and figure out what’s an asset and what isn’t.

Once you find something that’s going to make you money over time, figure out how to buy it. Then do it again, and again. That’s how you create wealth.

3. Set course for financial freedom

Once you start learning how to purchase things that make you richer, it’s time to figure out how to reach financial freedom.

It basically boils down to:

  1. Set a goal
  2. Acquire cash flowing assets until you reach your goal
  3. Quit your job
  4. Figure out how to remove yourself from the equation

Anyone can do this with the right vision and execution.


If you want to make more money with the money you bring home from your job, then it’s time to start investing. It’s time to start buying assets that make you richer, instead of whatever else you’ve been buying.

Stocks, real estate and business are the three most proven ways to put your money that build wealth and provide regular cash flow.

Happy investing.


I'm living the path to financial success and sharing everything I learn in this blog. I believe in the power of cash flowing investments, due diligence and time. This is my journey so far.

I learned everything I know from books, podcasts, conversations with friends and family and of course through real world experience as a cash flow investor. And I'm always pushing to learn more.

To see my investing timeline, check out our about page

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