How can you increase your wealth so you can buy what you want without draining your bank account? You may have heard about buying assets, not liabilities, so that you can afford what you want to afford, but is it really possible to make all the money that you want to spend?

All over social media you see wealthy people who have nice watches, fancy cars, or luxurious mansions. Are these luxury items only for the rich? What can we do to take a dream car, beautiful home, or ideal vacation from our wish list to reality?

You see all of these extravagant possessions that rich people have, but what you might not know is what they did to afford their luxuries. Their secret is they were buying assets, not liabilities. If you want to increase your wealth, you must do two critical things, starting with buying income-producing assets. 

Watch this video on how to buy assets, not liabilities.

Avoid Liabilities

What is the difference between buying assets and not liabilities? Let’s start with an explanation of assets, which appreciate in value and will put money back in your pocket. An income-producing asset could be a piece of real estate, a company, or stock. Liabilities do the opposite – they drain your money. The first step to increasing your wealth is to identify and stop buying liabilities.

An income-producing asset could be a piece of real estate, a company, or stock. Click To Tweet

What Not To Buy

First, make a list of what you shouldn’t buy. Some of these items are very tempting, and that’s why they get people into financial trouble in the first place. Wealthy people avoid spending money on these. So as a first step, steer clear of these types of purchases.

  • Impulse buys. You might be on your way home from work when you see a beautiful pair of shoes or a trendy new jacket in a shop window. They cost a couple hundred dollars but you believe you deserve it. But rich people don’t impulse buy. I have a collection of Marvel toys, including my Iron Man toys, but they weren’t impulse buys.
  • TV and video games.  Spend less time on video games and watching TV. According to 2015 data from Nielsen, “adults in households with annual incomes below $25,000 spent considerably more time consuming media (through TV, video games, or radio), compared to adults in households with annual incomes over $75,000.”
  • Luxury brands. It’s tempting to splurge on brand name clothes, jewelry, or technology but you don’t need to buy high end to look and feel good. Steve Jobs wore basic jeans and Mark Zuckerberg wore grey t-shirts. Bill Gates has a $10 watch. Michael Bloomberg has worn the same two pairs of shoes for over a decade. On a casual day, I sometimes wear a plain white t-shirt and jeans.
  • Overpriced home. Just because we have more money doesn’t mean rich people will buy an extravagantly priced home. If something is not worth the price tag, then it isn’t worth the price tag. Everyone, no matter what their financial status, likes getting a good deal.
  • Buy, not rent. In today’s market, buying property isn’t always going to be the best choice. Renting is more affordable, and is the best option for people who want to be mobile and flexible. Even the wealthy are opting to rent. A study found that “Between 2007 and 2017, top-earning renters increased by 175%, while homeowners within the same income bracket exhibited a 67% growth rate.”
  • Pricey haircuts. You don’t need an expensive haircut to look rich. If it’s done well, and you like how you look, you don’t need to spend a lot of money on your grooming.

Major Liabilities

Two other major purchases are on this liability list. The first is your car, no matter if you lease or buy it. Many Americans own one because of the convenience and the status. But when you sell your car, you will never get back the same amount that you paid for it. 

The second major purchase on this list may be a surprise. In his book Rich Dad Poor Dad, Robert Kiyosaki explains that an asset is something that you can profit from. It can make you money while you sleep. 

Many people think that their primary residence is an asset. But this is a common mistake. Your primary home is a liability. Your home will eat away at your money while you sleep. Each month, you give away money in mortgage payments. 

People who are drowning in debt have similar financial statements. They have a lot of liabilities and zero assets. For example, the average mortgage debt per borrower in the USA in 2018 was $200,935. So what can you do to increase your assets and lower your liabilities?

Buy Income-Producing Assets

Lottery winners want to buy their dream home, travel the world, buy a car, sail on a yacht, or go on a shopping spree. It’s the most wonderful feeling to have your dream come true and not have to worry about money when you make a purchase. But if you’re just buying liabilities, you will one day get hit with a dose of reality when your finances run low.

What you want to do is focus on buying assets, not liabilities. Rich people buy assets first because the profit from those assets pays for our luxuries. Here’s a perfect example of their mentality: instead of wondering if they can afford something, rich people wonder how something can make them money.

Instead of wondering if they can afford something, rich people wonder how something can make them money. Click To Tweet

Assets Worth Investing In

Let’s start by looking at what types of assets you can invest in.

When I wanted to buy a Bentley, I first bought a piece of real estate that would generate enough cash flow to cover my monthly payment of my car. Instead of buying the liability (the Bentley) I had to buy an asset first, such as rental property.

This way, instead of paying for my Bentley myself, out of pocket, I have my property paying for my vehicle. Our assets are investments, and that’s the key. 

Rich people are entrepreneurs who invest. If you’re a business owner, make some money from your business first, before you buy more things for your business. Put some of the money you make from your business into investments. 

Assets that produce income, such as real estate, bonds, and a business all increase your cash flow. Your home, gold, collectibles, art, and antiques can still be considered assets because they appreciate, but it’s difficult to predict if the appreciation will rise higher than inflation and the cost of their upkeep.

Turning Liabilities Into Assets

To increase their cash flow, people are investing in real estate and renting out property. They receive monthly rental payments every month from their condo or house. Others are buying their own homes and renting out a whole floor, a suite, or a room to make rental income. Owners of vacation homes, cabins, and other real estate are getting cash flow from Airbnb.

These short term rentals have become a part of the gig economy, a labor market with short term freelance work or side businesses. People with full time jobs or people who are self employed are making extra money from this work.

Rideshare drivers have turned their car from a liability to an asset by becoming an Uber or Lyft driver. Many drivers work on their side business by driving customers during shifts that are convenient to their schedule. 

Even clothing can be turned into assets. Online communities allow people who may not be business owners to rent out their wedding dress, expensive evening gown, or prom dress to people who live in the same or nearby cities, for example. They’ve found a way to turn a one-time use purchase into an asset.

People with full time jobs may pick up a side gig so they can write off expenses and stop some of their liabilities from leaking money. When you have a side business, you can write off the cost of items such as your cell phone, internet, and car, for example, depending on the type of business you have.

Always be thinking about how you can increase your cashflow by buying assets so that you can afford what you want to afford. If you’ve watched my Wealth Triangle video, you know that there are three things (the three sides of the triangle) that increase your cashflow:

  • High income skills: skills that give you a six figure income, no matter what industry or career you are in
  • Scalable business: a business that can improve profit margins while sales volume increases
  • High-return investments: an investment that will provide you with a 10 percent annual return year in and year out

Now, there’s one more thing that the affluent buy besides assets. They know the value of their time, and they see it as something with monetary value. 

buying assets not liabilities

Buy Time, Don’t Sell Time

Another way of buying assets and not liabilities is to buy time, not sell time. How much is your time worth to you

One of the most common regrets people have is not having the time to do what they wanted to do: spend more time with a loved one, work on a goal, or go on a vacation. They were too busy with their day to day routines, going to work, taking their kids to soccer practice, grocery shopping… and then one day they realize ten years have gone by.

How can you turn your time into an asset so that you can have the time to do the things you want?

People who struggle financially are usually employees who sell their time. They get paid based on how many hours they work, and their mentality is that it’s the norm to sell their time.

Rich people buy time because time is the one thing that cannot be replaced. Money is replaceable, customers are replaceable, but time is irreplaceable. 

Money is replaceable, customers are replaceable, but time is irreplaceable. Click To Tweet

I can always make more money if I have the time. I can make a ton of money if I use my time wisely, but one thing is for sure: I cannot create or manufacture more time.

Time Is A Commodity

Time is a rich person’s most valuable commodity. That’s why wasting my time is worse than stealing money from me.

The reason we pay for people’s help, and pay for their time and talents, is to save us time. For example, I would never hesitate to pay someone to clean my home or mow my lawn, because I know how much time it will save me. This thinking applies to everyone, including CEOs.

One time, I was visiting a successful CEO of a company that was making about $20 million to $30 million per year on average. I couldn’t believe my eyes when I saw that he was mowing his lawn. 

That tells me that this CEO does not value his time. He probably spent about two hours mowing it. Couldn’t he have found a better way to invest his time or utilize his talents? Of course, I gave him a hard time about it.

If you enjoy mowing the lawn, cleaning your house, doing your taxes, or buying your groceries, it is not the same as doing activities you hate just to save money. The time you spend doing something you hate could have been spent on an income-generating activity (such as work, a business, or investments). You could use the money from that to pay someone to do the activities that you dislike.

Ask yourself: what activities are you doing now that are a waste of your time? How can you do one or two things differently to get your time back? For example

  • Reading books to improve your skills instead of watching movies or reading Facebook posts
  • Spending more time exercising instead of sleeping for most of the day
  • Hiring someone to clean your house and using that time to learn how you can improve your investments
  • Hiring someone with more social media savvy than you to do your posts while you work on other aspects of your business

buying assets

ROTI Includes Family Time

You want to focus on buying assets, not liabilities, but you also want to set aside time for family and other things that are important to you. Rich people think in terms of Return on Investment (ROI) but we also think in terms of our Return on Time Invested (ROTI). If we’re going to spend our valuable time doing something, we want to know what our return will be.

I know that if I spend two hours watching a movie, that movie is costing me much more than the ticket price. That movie is costing me thousands of dollars if not tens of thousands of dollars. I love watching movies, don’t get me wrong, but it’s always going to be an expensive movie. 

I end up having to ask myself if that experience – that relaxing escape and time with my family – is worth that kind of money. Most of the time, it is worth the money. I need a break. I’m taking some time off to enjoy a movie with my family. I’m willing to spend the money. 

But at least I’m conscious of what it’s costing me, rather than having no concept of what my time off costs me. I don’t have to be making money every hour, and I want to invest time with my family.

When you understand what your time off costs you, and you get the value of time, guess what? You’ll be more in the moment when you take that time off. You’ll make sure you enjoy it.

In other words: Rich people value their time. You have to value your time to be successful. 

Bill Gates is a billionaire who books his appointments with people in six minute increments. My mentor books his appointments in 15 minute increments. I’ll book in 15 – 30 minute increments. How you manage your time and how you invest your time is key because it’s the most valuable investment you have.


When it comes to increasing your wealth, you want to focus on buying assets, not liabilities. Assets will give you the cash flow you need to buy the things that you want.

When you have money, don’t buy the luxury car or an expensive home as soon as you can afford it. That fancy car will bleed money the minute you drive it off the lot. Instead, buy income-producing assets first, and then buy the expensive watch or shoes later.

Income producing assets include real estate or a side business that turns your liabilities into assets. For example, driving for rideshare or renting items or property you own.

If you have an ego and you want to show off that you’ve “made it” by buying those things, you’re simply going to look rich instead of being rich. If you can let go of your ego, have self-control, and focus on buying assets first – that’s when you can become rich. 

You can buy those other luxuries later because your assets will pay for it. Your investments will provide for you, feed you, and pay for the luxuries in life.

I didn’t have luxurious possessions for the first 10 years of my career as an entrepreneur. For several years, I drove a Mazda and then later an Audi, before I got my Bentley. People will look at where you are today, but they don’t look at where you came from. 

And finally, treat time like a commodity. Take the time to relax and spend time with your family, but be very aware of what that time is costing you.