Now that you understand the basics of Leverage and its importance in allowing you to get things done more efficiently and effectively, this chapter will apply those concepts to financial and legal planning. Subsequent articles will demonstrate how physicians can apply these lessons to Leverage assets and people to maximize and maintain wealth.
Financial Leverage: The Foundation Of Wealth
For thousands of years, every great construction project required the use of levers to complete the building process. This was true for moving the large stones to build the pyramids of Egypt and lifting the stones for Stonehenge. Levers were used to build all of the great castles, churches, synagogues, and mosques around the world. Financial projects are very similar to construction projects. They both can seem overwhelming at the beginning—a collection of complex tasks that must be executed with skill and precision. The success of both types of projects begins with significant and detailed planning. After the plans are drawn, they must be implemented accordingly. One person could never accomplish the implementation of such plans. Instead, the plan requires a team of people working together to accomplish the same goal—for us, that goal is building and maintaining wealth.
Without exception, every high income earner and wealthy family has relied on financial Leverage in one way or another.
Once you grasp the concept of Leverage and the financial applications of Leverage, it becomes impossible to imagine how affluence could possibly be built without it.
Type Of Financial Leverage
Physicians can use different types of financial Leverage to create and build wealth. These include:
Leverage of Effort
Leverage of effort is a way to get more out of your financial plans and investments. Since the goal of Leverage is to get more done with less effort, all forms of Leverage require that you Leverage your individual effort by including the efforts of others.
Leverage of Assets
Leverage of assets is one way to increase your financial status and get more out of what you currently possess. If you had an unlimited amount of money or land, you wouldn’t need to accumulate any more wealth; however, this is not the case for most people. Since we all have limited resources, we want to get the most wealth/asset accumulation and financial protection out of what we have with the least amount of effort and the lowest amount of risk.
Leverage of People
Savvy business owners know that they only have the capacity to do so much and that the Leverage of people is one way to get more than 24 hours out of a day. By leveraging other people’s efforts, you can increase the number of tasks you can accomplish in a day. By leveraging people with special skills and expertise you don’t possess, you can get things done in much less time than it would take you to do these same tasks—if you could accomplish them at all.
Generally speaking, physicians utilize Leverage to some degree, but they are not thorough in their application. They try to Leverage effort by working hard—we know that. Doctors also may try to Leverage assets in their practice through medical equipment for which they can bill and they may try to Leverage people through technologists, nurses, and physician’s assistants, who can generate income to the practice. Still, few physicians apply this concept broadly enough in their practices to result in any real wealth building. Even fewer Doctors effectively Leverage people or assets with respect to their personal finances.
Within each of the three categories of Leverage discussed above—Leverage of effort, Leverage of assets, and Leverage of people—there are a number of different applications. Click here to read on each of these categories, discuss how they can be used to generate wealth and explain which of these types of Leverage are more appropriate for creating wealth and which types of Leverage will best help maintain higher levels of wealth.