I’ll explain breifly how the rich, middle class and poor people spend their money, but first here are 4 words you must know.
Cash flow: Money you have
Expense: Money you spend
Asset: Something that makes you money
Liability: Something that costs you money
Pretty much all people have some sort of cash flow, for example money from jobs they do. Poor people tend to spend a large portion of their cash flow on expenses, things they don’t need for survival, over priced services or gadgets. Eventually or immediately these expenses turn into something of little or no monetary value. Continued spending like this will always make the poor even more poor.
The middle class spend the largest portion of their cash flow on liabilities. These people may appear to be more successful or seem to have much more money than they actually do. Liabilities that are going to cost you more in the long run than the initial purchase of the item. This can include things like a big house, new cars or really anything that you are paying more interest on than you will receive in return. Being as these items often maintain a certain level of value the middle class generally don’t gain or lose very much, keeping them in the middle class.
The rich spend the largest portion of their cash flow on assets. Not only do they spend more on assets but they try to mitigate expenses and liabilities. Assets can be things like a business, stocks, investments such as STEEM or anything that pays you for having it. A house for example could also be an asset if used as a rental property and the money you bring in from it is going to be more than you spend on it. This is how the rich continually get richer.
There you have it, another easy way to increase your wealth. Simply shift your cash flow spending from expenses and liabilities to assets.
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