In the past few years the wealth gap debate has risen to be one of the hottest issues the world is facing with many throwing in options relating to higher taxation or mass redistribution of wealth in this piece we’ll take a look at how the rich are getting richer and what differences in approach they use versus the average person before we get started on this list there are two things worth.
Mentioning one there needs to be a reward for working harder than everyone else, and two rich people are not hoarding money they have it spread out in other people’s companies or investments, this is really important because unless we can reward those who perform well there wouldn’t be an incentive to do great things, and this is a very popular misconception people think rich folks have a room in their house filled with gold coins because that’s what they saw in Scrooge McDuck cartoons when in reality the amount of money you hear is evaluation based on how much money you could possibly get if you were to sell everything of value today with these two out of the way here are the 15 reasons why the rich are getting richer.
Think Bigger Than Everyone Else
This is one of the fundamental differences between the rich and the average in order to be rich you need to solve bigger problems while the average person concerns themselves with issues related to themself the rich are figuring out ways to build companies that can serve millions of people this think big mentality is the foundation for well building truth be told it takes almost the same amount of effort to build something small as it does to build something big if you’re going to think anyway might as well think big .
Having Money Ready
opportunities one of the reasons the rich keep getting richer is because they always have money lined up for opportunities that’s why the middle class and poorer class think of rich people as cheap they’re saving money but here’s the simple truth let’s say we have two people one has money saved ready to invest in opportunities while the other does not the same opportunity presents itself to both individuals because person a has the money to access it their personal wealth will grow while person B will remain the same this is the fundamentals of why some people move ahead while others never move at all.
Having Value Based Long-term Investments
they don’t touch this is where things get interesting let’s keep the comparison going say we have the same two people each of them having $20,000 one person uses the 20 grand to put down as a down payment on a house that’s worth $100,000 which is to be rented while person B uses it to buy a new car and a new TV because of the rental income the property is paying for itself 10 to 20 years down the line that property is now worth $200,000 and has been paid for in full by the tenant rent while the car has needed constant repairs eating up more money and is now unusable this is how the rich are getting richer they use their money to buy assets that generate money either directly or through appreciation if you can buy enough of these assets you could reach a point where your wealth has gathered enough momentum that it’s constantly going up basically the income your wealth generated is greater than what it costs you to live the life you want let us expand on this because it’s real valuable
They Only Spend The Interest
Not the principle, there’s a point in wealth building when a person becomes financially free financial freedom is when the money coming in from assets is double that of your monthly expenses as long as you don’t dramatically increase your lifestyle, your wealth is constantly going up you have excess capital which you can reinvest leading to more money coming in and so on the catch is to never spend the principal or liquidate the asset in order to cover temporary expenses, we’ve seen this happen many many times with families when parents die the children immediately liquidate the assets in order to spread the money out evenly this is where the poor are getting poorer once they see the cash they spend it it only takes three generations to build legacy wells, if three generations work at an average pace and only acquire without ever selling any of the previous assets by the time the fourth generation comes in they’ll all be rich yet people are selfish and would rather spend it all now than secure the future.
The truth is the rich are getting richer because they invest in financial education they learn about how money works how to buy assets instead of liabilities how to invest for cash flow manage debt and how to control their spending think of it like this let’s say you want to bake an apple pie that is your desire you must first learn the recipe for an apple pie and then go out and get the proper ingredients without the decision to bake the apple pie.
Surround Yourself With Other Rich People
if your friends are poor guess what you’re probably poor as well that’s why you and your friends live in the same environment you have the same problems and issues and your life is pretty similar here’s the wake-up call if you stay where you grow up you will end up exactly like your parents for some people that might be enough while others are looking to make the jump the people you surround yourself with are one of the biggest factors when it comes to personal success and building wealth they motivate you they inspire you to do bigger things they call you out on your and support your ideas you.