How the rich get RICHER!
How the rich get RICHER!
In this post, I’ll shed some light on why the wealthy become wealthier over time.
They don’t cheat; it is just the matter of how a person handles their finances.
Let’s start :
The middle class works hard, strives to make a living, and works under the rich their whole life, making the rich richer.
WHY is that so?
The difference is:
- The rich do not work for money : the poor and middle classes spend their entire lives trying to make more money by working hard for promotion, which can take many years, and staying in a higher tax bracket, whereas the rich work to create cashflow (money pipelines for themselves).
2. The rich use DEBT : The reason they get richer is because they use debt efficiently. Rich people outsource money from banks and other lenders and invest in assets that generate money even if they do not work, they have named this debt as “good debt” because someone else who pays for it Meanwhile, those who are not wealthy take out loans to buy luxuries and dream homes for themselves in order to gain social acceptance, which burdens them and is referred to as “bad debt.” The wealthy spend on luxuries only when their cash flow exceeds their spending habits, which are funded by cash flow.
3. Spending Habits : The common man buys material stuff using their savings or loans instead of generating cash flow, then strives to get rid of the bad debt their whole life . The rich do totally different, as I said first they reduce their liabilities and increase the asset column using good debt, and once the debt is off, they achieve the power to purchase all the luxuries they desire without struggling .
4. Rich take calculated RISKS : The rich know where the big money is, so they continue to take calculated risks and increase their asset column while the common man is driven by the social norms, and gets scared to do something different than others feeling that they are out of the crowd, all the lines that a person who is illiterate financially says, such as : “play safe,”, “get a safe job,”, “invest in mutual funds,”, “stocks are volatile”, and many more, .
5. Teamwork : Most of us believe in becoming rich alone, but to make something big you need people smarter than you and even the less smarter ones to achieve it . That is what the wealthy do: they form fantastic teams, take the lead, and propel everyone forward.
6. Knowledge and Mindset : Despite of the age, the rich continue to attain knowledge every moment. The problem with the common man is they do not wait and observe what is wrong, weak, or needs improvement. They earn and save money to spend all of it on a grand party or so which does not bring anything valuable to their future.
7. Emotional Intelligence : The rich know that the feelings and emotions cannot be controlled, but they can be chanalised. They use the pain, sadness, and happiness in the right place and direction and make exponential gains from it .
8. Importance of TIME : The common man sell their time to the rich to make wealth while the rich own their time . They use it to invest, build companies and cashflow. They avoid unnecessary parties, show off and relations which harm them. However, the average person does not channel his or her emotions in order to generate cash flow. Instead they go to parties, choose to stay low instead of trying and failing, and fall into unwanted relationships for receiving social acceptance .
Definitions for the important terms, a simplified version :
- Cashflow : “cash flow”: an asset vehicle which generates you some amount on a regular basis unless you sell or change it .
- Asset : This is the money generating vehicle which puts money in your pocket even when you are asleep . (example : you own a house which is on rent, and the tenant gives you a payment each month.)
- Liability : The material that takes money out of your pocket (Such as bad debt, parties, taxes, and so on.) .
Thought for the day : “The more stronger you get the more tough challenges you will face, the day you stop getting those problems is the day you are satisfied with what you got or ignorance has taken over your mind”.
I hope these 8 methods might have given you clarity and guidance to improve your family’s financial statements .
Thankyou and all the best for your future endavours .
Image source : GOOGLE
