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Everyone wants to know "How do I get rich?" Well, there's no overnight answer - unless of course you win the lottery. But let's get real for a minute. What's the one defining principle that gets the wealth ball rolling along?

Here's the answer: cash flow. Cash flow is a concept that is not taught in high school or even in most colleges and yet it's essential to understanding wealth accumulation and asset growth.

So what is cash flow? Cash flow is what's left after you pay out all your bills each month. Let's say you make a net monthly income of $4000. Your bills and expenses total $3200. In this example your monthly cash flow is $800.

The wealthy use this concept to gain more and more money. Those who are rich buy income-producing assets (like businesses, real estate, dividend paying stocks, bonds, notes) that they then use to buy even more assets. Once you have this cycle going you will be continually increasing your net worth. (See chart, above left)

So where do you start? Make a full list of all of your monthly income and their sources. Then also list all of your monthly expenses, specifically those that are fixed - like rent, credit card bills, loan payments, mortgages, car notes etc. After you have listed those, make a list of all of your assets and their current worth. That would include all of your checking and saving accounts, brokerage accounts, real estate, furniture, vehicles (that are paid for!) and other items of real value.

Most people don't have any income producing assets. Most people only have liabilities. Liabilities are things like credit card debt, loans, notes, mortgages, payment plans, student loans, medical bills and car notes. Ideally you want to reduce these expenses and pay them off. Once you increase your monthly cash flow you can begin buying assets that will produce passive income. Passive income is money you make no matter what. In other words it's not "earned" income, like the kind you receive for working for an employer.

These concepts may seem oversimplified but these are the principles that all wealthy Americans have used to acquire their assets. If you aspire to live that kind of life you must discipline yourself now and begin putting these principles into place.

Learn more about this author, Adam Bourque.
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