The one thing that rich people buy-that the poor and middle class don't
-There might seem to be a lot of differences between the rich, the poor, and the middle class, but what if I told you that there was only one idea that the rich use that the other two do not, that makes all the difference?
The one thing that rich people buy that the poor and middle class don't
It's so simple but so important that when I finally understood it, it changed my life forever.
I'm going to open your eyes and show you exactly what I mean, and you'll see why the rich get richer, the poor get poorer,
and the middle class are getting squeezed out.
It's not about what they do, but what they BUY.
I want to make this as simple as I can, but to start, I want to give you a few definitions of four important words. When I first heard these, I thought I knew them but it turns out I was wrong.
Assets Generate Incomes - Liabilities Generate Expenses
The words are:
Income (money you bring in)
Expenses (money you spend)
These two words are used by the rich, poor, and middle class, but it's these next two that I thought I knew but blew my mind:
Liabilities (something that costs you)
Assets (something that pays you)
Before, I thought an asset was something you own, like a house, a car, or something expensive.
But the rich have a different definition of Assets, and this is the one we'll be working with:
"Something that pays you"
Usually, people call their house an asset, and if you ask an accountant, they'll tell you it is, but if you use these definitions,
it can also be a liability, right?
A house you own but live in COSTS you money, so it's a liability.
BUT, a house that you rent to other people and make money from is an asset.
So, a quick review:
Income: money you make
Expenses: money you spend
Liability: costs you money
Assets: pays you money
So, I mentioned that there was a simple idea that separated the rich, poor and middle class, and it's all wrapped up in what they do with their money when they get paid.
Basic Account Relationships
The poor take their money and buy... DOODADS.. They buy shoes, and ringtones,
and mountain dew, and tchotchkes, and blue-rays, and clothes and TVs and games and a bunch of STUFF that they found for
cheap-maybe at a flea market, garage sale, dollar store, or Walmart.
Their houses are cluttered with junk, but it was all "just a buck!" or "inexpensive things". Their cars are full of junk, garages, etc.
They take their money from their income and spend it on their EXPENSES each month. Right out the door, as fast as it came in.
It's easy to fall into this trap because everywhere we look there are things to buy!
It makes the world go 'round, but the problem is that after years of working, they have nothing to show for it because all the "little thingys" add up.
I was born with this idea, and for a long time, that's what I thought you should do with money- Spend it!
I had heard of "saving", but even then, I was saving it to buy something "BIG".
The problem is that the poor never let their money create more money.
This isn't a character flaw, and it's not "wrong", it's just that it keeps the poor on a terrible cycle that is very hard to escape from. You have to be willing to learn and challenge.
I was willing, and I learned that creating wealth is not a big secret...
It's a Recipe.
The only reason someone doesn't create wealth is because they don't know the recipe, don't want to know the recipe, or never use the recipe.
Dollar $ Sign
I have never baked cupcakes because I never learned, never had the recipe, and never tried to bake them.
It's not enough to get the recipe, you actually have to COOK!
-So let's talk about the middle class now.
Some people in the middle class think they are rich, because they might make a good salary at a good job.
Maybe they make a six figure income, but what they buy with that money is what keeps them stuck in the middle class.
Instead of buying little inexpensive thingys, the middle class buy LIABILITIES.
Remember I said that a liability is something that costs you?
Well, the middle class buy things like big houses, nice cars, vacations, and pay for them on credit thaty they pay for every month.
Each month it's a new thing, but it just adds a little bit to the monthly bills or expenses.
For example, let's say someone in the middle class makes $15,000
They pay their monthly expenses like the mortgage (or rent on a fancy apartment) and food and lifestyle with $7000, but then a car
costs $7000 down and a few hundred a month, then a watch that costs a little bit per month, a vacation that costs a little bit per month, etc. etc.
Until they are living on the credit card that they pay a part of every month.
After a while, their monthly debts cath up to their monthly income, and then they are trapped with what I've heard called "Golden Shackles".
They keep buying LIABILITIES that cost them every month, and then they are trapped by the very things they bought to make them happy.
Now, they are stressed out because they HAVE to make more money next year for the kids schools, or the next vacation, or whatever. And they put THOSE liabilities on the credit card.
The poor and the middle class get trapped because they also get into a situation where the only way they make money is by trading their TIME for it.
Either their body or their knowledge gets traded for the money they make, and there are only 24 hours in a day.
Whether you make $10 an hour, or $1000 an hour, you still have to trade that hour for it.
A fast food worker still has to serve food, a dentist still has to see patients.
This is when the 2nd job comes into play.
It's a short-term band-aid to a long-term problem because there are only so many hours in the day.
Often these people end up being workaholics, waking up just to go to work and pay bills.
And before I continue, I want you to know that you can make a lot of money, but still be a poor person because of how you spend it.
But here's the critical difference for the wealthy.
Instead of buying stuff and liabilities with their money, the wealthy... Buy ASSETS.
ASSETS (something that pays you)
This blew my mind when I heard it because I had no idea that you could even do that... BUY something that PAYS YOU?
It made no sense at first, so I chose to keep learning.
Here's what I found out:
The wealthy buy assets. These assets pay them money, which they use to buy more assets which makes them MORE money.
The ASSETS make them money instead of their TIME.
Here are a couple of assets that you might have heard of:
- Stocks
- Bonds
- Real Estate
Now when I heard this, I said "Oh! Investing- of course they buy 'investments'- duh!"
And the person who taught me this asked me "What is an investment?"
and I said "Well, it's something you buy, and then you hope it goes up in value, and then you sell it for more money...right?"
And he said... NO.
That's TRADING. That's GAMBLING. And that's what the poor and middle class think investing is. They are wrong.
Then he asked me- would you like to know how RICH people define investing?
And I said YES!
And he said- "I already told you:
They BUY ASSETS".
Instead of buying something that you HOPE goes up in value after time goes by, the rich buy ASSETS that pay them NOW.
You see, they buy stocks that pay a dividend- it pay them money every month.
They buy bonds that pay them every month
They buy real estate that PAYS them every month.
Like I said before, not a house you live in, hoping it goes up in value in ten years,
but a house that you RENT OUT NOW to people who pay you every month.
But there were two other kinds of assets that I want to talk about now:
EDUCATION can be kind of asset if you learn how to do something and you can use it to make more money.
There's an old saying "If you think education is expensive you should see how expensive ignorance is" but where the rich really make the difference is when they buy or create an asset that is a BUSINESS.
Especially a business that can create passive income.
When you can build up a business to where it pays you even after you stop working it, then you have a true asset.
It's what the real wealthy people do, and it doesn't have to be some "multi-national corporation".
A great example of this kind of business is a vending machine.
Vending Machine
If you have a vending machine in a place with a lot of traffic, people buy the candy, and you just collect the money.
Sure, you might pay for the candy, and for someone to restock it, but all you do is get the machine, and get the money, and then buy another machine. And then get the money, and buy another machine. Over and Over.
Warren buffet did this with old pinball machines... now he's one of the wealthiest people on the planet.
Price is what you pay. Value is what you get. >- Warren Buffett
He started with pinball machines, and now he buys big businesses that pay him monthly.
Same recipe, different ingredients.
Pinball machines as vending machines
If you, (LIKE ME) feel excited now that you've learned this, then here's where YOU come in.
Years ago, I came across these ideas when I was working a day job.
I am a software engineer, and you've seen me on the internet now, but back then I was just working to pay the bills.
I got jobs answering phones, tempting, whatever, doing things just for money, so I could pay bills on liabilities and STUFF that I had bought.
Then someone shared these ideas with me, and I wanted a change enough that I chose to keep learning.
Now things are entirely different.
I spend my time doing what I want to do, I've been on adventures, I've written books, I've coded some software, and and I decided to take action when I had the chance to build up a passive income business online.
An online Asset. Kind of an online vending machine (if that makes sense)
I took some of the money I made from that ASSET and bought more assets in the form of education, so I could LEARN MORE and take MORE action, and build MORE online vending machines.
I started telling people about what I had learned, but I found that you can't understand any of this stuff unless you're looking for solution,
you're open to hearing one and feel excited about the idea.
When I was poor, spending all my money and time on stupid STUFF, I was open when someone asked me if I wanted to make some more money. I answered a very hype-filled ad, was willing to research,
take action, and it changed my life forever.
So, on the next page is a passive income business ASSET that I use to make money with.
Remember:
The poor buy STUFF
The middle class buy LIABILITIES
The wealthy buy ASSETS
Preferably businesses that PAY YOU money then take that money and buy another asset that produces more money.
That's the recipe for wealth.
I really hope that you learned a few things from this article, and you choose to join us now on the next page.
Source: https://moneylifelover.blogspot.com/2017/06/the-one-thing-that-rich-people-buy-that-the-poor-and-middle-dont.html
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Hell yes good post Poor people and middle class people buy shoes and hats its so funny! I can always tell who doesn't have money new shoes new hat
@wavemaster I don't know if you saw some pictures of Mark Zuckerberg on google or facebook , how simple he wears. Now can we say about him that he has no money to buy clothes ?!? Absolutely not. He has billions.
Yes he dresses very simple not like a poor person ;-)