The Principle of Leverage And How To Use It In Our Life

Posted by Fitz Villafuerte under Mindsetting, Productivity on May 17, 2008

What is leverage? What does it mean and why do a lot of finance experts use this term often? How important is it when it comes to money, business and wealth?

I first encountered this term in my high school Science class when we were studying about simple machines. That day, we talked about seesaws, fulcrums and pivots.

In principle, a lever allows you to use less force to lift or move objects.

We may not know it, but this theory is applied in a lot of the everyday objects we use such as scissors, bottle openers and even doors.

With regards to money, we can likewise use the principle of leverage to accelerate our financial goals. When properly understood and intelligently applied, leveraging will allow us to earn more with less work.

So how do we do it? How do we use the principle of leverage to help us gain personal and financial freedom?

leverage

In a broad sense, we can apply the principle of leverage in everything that we do in our life.

We can start on a personal level and leverage on our mind. The fact that you are reading this article shows that you are already doing that.

Simply put, we should learn to invest in ourselves.

Read books, attend seminars, join communities and expand your knowledge. By doing so, you will acquire more skills and talents which you can use to efficiently and effectively do more.

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Of course there is financial leverage.

In general, it simply means using other people’s money and making it work for us. The value, utility and purpose of this type of leverage is probably the fountainhead of wealth.

When we simply rely on our own capability to save money, then it will take some time before we can invest and accumulate wealth. But by utilizing our resources and assets to acquire good debt (an investment debt that creates value), then we can expect exponential growth on our money.

There is also what is called resource leveraging. Others may refer to it as the power of collaboration.

In business, especially for starting entrepreneurs, many fall into the trap of self-employment.

It’s common to see excited and hopeful individuals who started a business which eventually closed after less than a year simply because the person got tired of running it on his own.

Put controls in your business and learn to employ other people to work for you. Explore partnerships for your business and always consider using the aid of other individuals and experts to help you plan your actions and accomplish your tasks.

There are other forms and other ways to apply leveraging in our lives. I leave those for you to discover and ponder.

Just remember that the principle of leverage is a powerful tool we can use to get ahead financially in life. As a famous quote from Archimedes would say, “Give me a lever long enough and I could move the world.

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15 Responses to “The Principle of Leverage And How To Use It In Our Life”


  1. […] that anyone who holds an aversion towards credit cards are missing out on one of the most practical financial leverage tools available to […]

  2. […] are you set to gain some financial leverage? Here are some key points you should consider and a few tips you should follow when choosing a […]

  3. […] Take Out A Personal Loan A personal loan is something you can leverage on especially if you are employed. Depending on your credit history and employment status, some banks […]

  4. […] do because I’ve experienced how powerful it is to leverage on […]

  5. […] Pays through credit cards but pays in full monthly, knows how to leverage […]

  6. […] Pays through credit cards but pays in full monthly, knows how to leverage […]

  7. […] Pays through credit cards but pays in full monthly, knows how to leverage […]

  8. […] Pays through credit cards but pays in full monthly, knows how to leverage […]

  9. […] Pays through credit cards but pays in full monthly, knows how to leverage […]

  10. […] However, it is really important that the distinction between good debt and bad debt are clarified and understood well. When we do, we can begin to use debt not because we have shortage of cash but because we can leverage it to seize opportunities. […]

  11. […] Insurance: Much like an emergency fund, an insurance plan also provides us with safety and security. But more than that, it also allows us to leverage our money. […]

  12. […] us several lessons: the power of automatic savings, the value of research and due diligence and how leveraging can really help us achieve our goals […]

  13. dllysen says:

    I remember the lever and fulcrum too. How simple machine works… We can also use this principle in other things like what you said; and in delegating our time and efforts.

  14. […] world of entrepreneurship. I was never able to wipe out my credit card debts BUT INSTEAD I learned how to leverage it for financial […]

  15. […] Debt provides us with leverage, which can help us earn more money – but it is only possible if we have learned to live life without it. […]

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