If you build a system generating passive income, you can go out of business at any time and the system will still give you money.  Here's an example: A systematic business owner can hand the business over to a manager and still have an income.  Website owners can stop working for website and still earn income (e.g. automated advertising).  A writer can stop writing and still earn royalties from the books he writes.

When they feel that the present system is strong enough, they can continue to create a new system, thereby creating a new revenue stream.  From these examples, we can see which category we are currently in.  Are you building a system generating passive income or are you working directly to earn money?

If you are working directly to earn money which doesn't mean that you should quit your job immediately to start a business.  There should be a transition period, or if you love your work you can work on both simultaneously.

2. Buy assets instead of liabilities

The second rule deals with how you should spend your money. 

This rule says that when you buy something, make sure it will make money.  And you should use as much money as possible to buy assets. It could be real  estate (from which you earn rental income). By using this rule, you can see if your spending is wise or not.  If this spending will help you to generate more money in the future, this is recommended.

One of the reasons many people never achieve financial freedom is that they spend their money mainly on debts rather than assets.  Those who achieve financial freedom, on the other hand, are the ones who are willing to put aside their enjoyment to build assets from scratch.

With these two rules in mind, you should ask yourself two questions: Am I building a system generating passive income?  Or Will the asset that I buy generate money?  The goal is to answer "Yes” as much as possible.