What it means to be rich…
There is a difference between being rich and wealthy. Some rich people make money and see it as an opportunity to spend and live large. They have the money so why not spend it ? To some being rich would be a dream come true. People love to talk about everything they would have and do if they were rich. “ I would buy this or that.”
What some may not know is that rich people can have a lot of debt. It doesn’t matter how much money you have, if your expenses are higher than your income, you can go broke. For example you can make 230,000 a year, but spend 250,000 that means you are living above your means.
“The man who never has money enough to pay his debts has too much of something else.”
-James Lendall Basford
Certain celebrities' have gone broke because of their rich lifestyles. What typically happens is they file for bankruptcy. Some familiar names are 50 cent, Trump, and Mike Tyson.
Rich people could create bad debt, they own lots of cars and homes and go on expensive trips often, but some are unsure how to manage their money. They may hire an accountant to do this for them depending on if they trust themselves with their own money. The rich have a lot of money with many financial liabilities and expenses to meet. Rich people wear their money. They love the gilts and glamor of showing off designer clothing shoes and accessories. It screams look at me I have money!
Liability versus Assets
An asset is anything that puts money in your pocket regularly or generates income. For example, owning a property and having a tenant who pays monthly.
• Liability is anything that causes outflow of money from your pocket.
• A home purchased through a loan from the bank and your car are examples of liabilities, whereas savings invested in profitable schemes earning income for you are assets.
• Assets are recorded on the left side of a financial statement, whereas liabilities are placed on the right side.
Being wealthy is a lifestyle…
Wealthy people have a financial growth mindset. Assets are important for them. They think of ways on how they can make their money grow. They have the future in mind and know that they want to live a comfortable lifestyle one day. They are firm believers of generational wealth. This is money that is passed on to their children and their children and so on. Multiple streams of income come to mind.
Wealthy people do not always wear or flaunt their money. The clothing and accessories they use are not always name brand, and they can probably name a hand full of brands they had in a single life time. With clothing and home design they gravitate to quality versus quantity.
Wealthy people connect with like-minded individuals. This is how they can network and come up with new ideas and information on how to make their money grow. They believe in having multiple streams of income. There are two basic forms of income: active income, in which you work for the money you make, and passive income, in which payment isn’t directly tied to the number of hours you work. Passive income includes rental property, dividend stocks, index funds, writing a book, or creating an app, all of which will bring in a steady flow of income from sales or royalties.
Wealthy people know how to make money work for themselves. They invest in properties like homes or a business. They put money into the stock market, two good ones for beginners like me are Stash and if you want a custodial account for your kid’s Stockpile is good to check out as well.
True wealth is not measured in money or status or power. It is measured in the legacy we leave behind for those we love and inspire. Cesar Chavez
Wealthy people know who they can and can not do business with. They keep a distance from people who brag about what their plans are instead of having a concrete plan. They take action and work towards their goal.
Wealthy people think about their future and what they want to leave behind. It’s important to think about not just your own lifestyle, but also what you would want to leave behind to your children.
Thank you for reading this article !