Creating value for yourself – building your own financial empire – begins with creating value for others. You do this by producing something or performing a service that other people value.

Economists say producing things is making “goods.” Goods are tangible things like shoes, cars, furniture, toys, books, and airplanes. Then you have “services,” like things doctors, lawyers, waiters, barbers, and teachers do.

To make goods or perform services people want to buy, you need skills and knowledge. If you are interested in acquiring wealth, power, and freedom, it’s essential to become a lifelong developer of financially valuable skills and knowledge.

Unless you inherit a fortune, skills and knowledge are the wellspring your wealth will flow from.

Some skills and knowledge are more highly valued than others. The values placed on them are public knowledge. So, it makes sense to survey the landscape, see what skills and knowledge are valuable now and will likely be valuable in the future, then acquire as many of those as you can.

The more skills and knowledge you build, the more money-making options you’ll have. Developing a variety of skills and knowledge ensures you’ll always have lots of choices when it comes to building a career or a business. As stock traders like to put it, there will always be a “bid” for your time and energy.

Some skills that will never go out of style include selling, marketing, and managing people. In fact, if you do nothing but master these three skills, you are virtually guaranteed to be a successful business owner or highly paid employee. After all, every business needs to sell its products and services. Every business needs to manage its employees.

As we go further into the age of supercomputers, artificial intelligence, and robotics, it’s essential to avoid basing your earning power on basic skills that a computer can replace. Some jobs at risk include store clerk, bank teller, loan officer, insurance claim processor, and tax preparer.

In addition to being the source of your initial and ongoing capital, skills and knowledge are critical because, barring a major health problem, they cannot be taken away from you.

A divorce, illness, or natural disaster can take away a person’s money and belongings. But if that person has very valuable skills, he or she can get to work and have a million dollars in the bank in a year.

Recently, the issue of acquiring skills in college vs. in the “real world” has become a hot button issue. Some people say college is a big waste of time and money while others believe a degree from a “good” college is essential to success and happiness. I believe this isn’t a black-and-white issue.

Saying “college is dumb” is like saying “Mexican food is bad.” Both statements make for quick, controversial soundbites. They’ll get people to click on an Internet headline out of curiosity. But the reality is both statements are too simplistic to be useful or accurate. The issues they relate to are too nuanced.

The reality is some skills are best acquired at a conventional college… and some skills are best acquired on the job. If you want to become a doctor or an astrophysicist, it’s best to go to college. If you want to be a great salesman or a great manager, you can acquire those skills on the job. You don’t need to ever set foot in college.

I’ll also say that most people overestimate the importance of college for the acquisition of many financially valuable skills… while also overestimating the financial value of skills they acquire while in college.

This “double bad” set of overestimations leaves many college graduates with lots of debt and few financially valuable skills. It’s a combination that makes it difficult to achieve financial freedom.

Whether you acquire financially valuable skills in college or in the real world, make sure to get them if you want financial freedom. Again, they are the wellspring from which wealth flows.

Savings: Save Your Money and Get Control

Let’s say you’ve acquired some financially valuable skills. You can bring home the bacon.

Congratulations. That’s the first step towards taking control of your life and getting what you want.

The next step is saving that money, aka “not blowing it.”

If you want power and control over your life, you need to save a big pile of money. After all, what good is making one million dollars if you spend every penny of it? You’d still be living paycheck-to-check without any emergency savings.

Call your pile a “rainy day” fund or your “nest egg” or your “freedom fund.”

Whatever you call it, start building it as fast as you can. The sooner you pile up $100,000 or a lot more, the sooner you’ll have control of your life, the sooner you’ll have freedom to do what you want to do, and the sooner you can start building an empire.

Want to take off work and travel around South America for a year? No problem.

Want to hang out and read books for a year? No problem.

Want to take care of a family member for six months? No problem.

A big pile of savings makes these things (and many more) possible. A big pile of savings gives you freedom and control of your life.

The opposite of having a big pile of savings and tremendous freedom is spending your money like an idiot and having a big pile of debt.

I’m not talking about taking on “wise” debt, such as the type helpful in starting or expanding a business, which can be useful. I’m talking about consumer debt… debt you take on in order to live above your means.

The more you go into consumer debt, the less freedom you have. It’s that simple.

Debt is often called “slavery” or “prison” for good reason. It greatly limits your freedom. It takes control of your life away from you and hands it to strangers.

If the guy with $100,000 in student loans, $10,000 in credit card loans, and no savings is being treated horribly by his boss and hates his job, tough. He’s “stuck.” He has painted himself into a corner with debt. His ability to make a career change is horribly limited compared to the guy who has $100,000 in the bank.

And keep in mind, overspending on “big ticket” items, like cars and houses, have the most harmful effects on your ability to save.

The house is where the most common big blunder is made. Spending big on a house doesn’t just hit you on the day you close the deal. It has massive “ripple” effects that harm your ability to save in the future.

You see, when considering the cost of a new home, most people look at the asking price then stop there. But this unsuspecting home-buyer is in for a slew of related expenses…

A more expensive house means more spending on maintenance, furniture, insurance, and taxes. Buying too much house with too much debt is probably the biggest destroyer of personal power in America.

All too often, the impulse to “keep up with the Joneses” ends up killing the ability to be free. Your stuff will control you, not the other way around. I once heard it described as “people don’t own things. Things own people.”

So, instead of borrowing money to buy a $70,000 car, buy the $15,000 car with cash. Instead of borrowing money to buy a $800,000 house, buy a $250,000 house.

If you do not develop the ability to save a large portion of your earnings, it’s unlikely you will ever have real freedom. You will always lack a “money cushion” that allows you to pursue interesting opportunities, exit undesirable situations, and acquire assets.

Is money the root of all evil?

Is greed bad?

Don’t spend one second thinking about those meaningless questions. They’re mental masturbation.

What’s important is this: Having a big pile of money gives you freedom and power. Having a big pile of debt destroys freedom and power.

After you master the art of making and saving money, you can move onto the next phase of financial empire building: the acquisition of assets that can appreciate in value over the long-term, throw off cash flows over the long-term, or ideally, both.

If you do nothing more than become a dedicated maker and saver of money, you will be ahead of 99.9% of your fellow citizens when it comes to building wealth.

These two critical ideas on building wealth are not complicated. They are also not particularly exciting.

But what they lead to is very exciting: Control over your own life. Total financial freedom. The power to shape your world as you see fit. The ability to build your personal financial empire.

You see, if you simply make lots of money and place that money in the bank, and not buy a single business or piece of real estate, you are guaranteed to amass a level of wealth that gives you control over your life and the power to create your own world. You could have an “Empire of Cash” and do just fine.

Having said that, there’s another phase to building your financial empire that will make you and your family far wealthier, more secure, more able to handle shocks to the economy. It will even enable you to generate wealth if you are not actively working.

If you’re interested in a truly robust, truly secure, and truly self-sustaining financial empire, this second phase is critical.

It’s called The Ownership Phase. It’s the subject of Part 2 of this “Building Your Financial Empire” series.

But for now, remember – the foundation of your financial empire is a valuable skillset that enables you to earn lots of income…which you then save.