Why do the rich get richer? Or so it seems. Why do people with wealth seem to be able to keep increasing their wealth and those who don’t have enough money can’t seem to get a break? Or so it seems. These are commonly asked questions among those who are either classified as poor, low income, or struggling financially. This seemingly economic unfairness is a source of a lot of frustration, envy, hatred, and anger towards those who are wealthy. Much of these negative feelings stem from a lack of information, misinformation, or misinterpretation of what it truly means to be wealthy. But the fact of the matter is, people of all income levels can do many of the things wealthy people do to increase their finances and assets. But it takes making good financial choices and establishing profitable money management habits. And it’s not as hard as you think.
Let’s start by clarifying what it means to be rich or wealthy. Generally, when the term rich or wealthy is mentioned, the average person tend to associate it with a certain dollar amount such as one million dollars. This train of thought lead many to believe they will never have a million dollars, and therefore they can never be rich. In reality, being rich or wealthy is different for everyone, depending on what amount of money you feel is necessary for you to be debt free and financially independent. This means that if you stopped working today, the money, investments, and assets you have will support your desired level of living for the rest of your life. Notice I didn’t include the word income as a requirement of wealth. Income is a means to obtaining wealth, but it is not a representation of wealth. As you have probably heard before, “It’s not what you make that’s important, it’s what you keep”.
What I’m about to say may shock some, but it’s true. The financial system and governmental regulations are set up to benefit those who take advantage of the rewards and tax breaks they provide. And because it is largely rich and wealthy people who do, it seems like they keep getting richer and poor people keep getting poorer. Al Jazeera Media Network, an independent news organization reported that during the Pandemic and through 2022, the wealth of Billionaires around the world more than doubled. This is in the wake for government shutdowns and unprecedented worldwide inflation. The short answer according to Al Jazeera, “Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments.”
One misunderstanding about wealthy people is that they were born to wealthy families or were given their wealth, and didn’t have to work hard for it. Although this does occur, it is not the norm. In fact, 88 percent of millionaires are self-made and did not inherit their wealth, according to a study done by Fidelity Investments. The report goes on to say that many of them worked hard to achieve financial success, then they made good financial choices, took advantage of the policies and systems in place, and developed habits that contributed to them becoming wealthy. They understood the power of compound interest and holding on to an investment or asset for a long time. They believed in saving additional income before spending it. They increased their financial knowledge and their ability to earn greater income. They did not put all of their money or resources in one place or investment.
The fact of the matter is, it doesn’t matter what your income level may be. If you are not saving and investing, and taking advantage of the same benefits and tax breaks as the rich and wealthy, you will continue to miss out on the opportunities to grow your wealth. It doesn’t take having a hundred thousand or tens of thousands of dollars to invest in the stock market or participate in your employer’s retirement plan. It’s true, those with a high income and greater financial means can invest and risk more. But you can invest and save something regardless of your income. You have to start somewhere and you need to start now. It just requires that you make the decision to do it, and develop habits that will continue to support your efforts to become financially independent and debt free.
Here are some key takeaways from this blog that rich people do that you can do also.
The rich delay immediate gratification for long-term financial gain.
The rich spend the majority of their money on items and assets that appreciate in value, rather than those that are immediately consumed or depreciate in value.
The rich don’t feel it’s necessary to buy or have the latest of everything.
The rich don’t spend essential financial resources on gambling and the lottery.
The rich take the time to improve their financial knowledge and money earning potential.
The rich invest in financial assets that benefit from downturns in the economy or financial markets.
The rich have multiple streams of income.
The rich have a plan for how they are going to spend their money.
At Amazing You Coaching and Consulting, it is our mission to help you make your life better, by teaching you how to plan and utilize your finances like rich and wealthy people do. If you would like a free consultation, gives us a call at (281) 802-5351 or send us an email to amazingyoucc@outlook.com, or visit the website at www.amazing-you.org, to get started on the path to becoming debt free and financially independent. You have nothing to lose and everything to gain.
Blessings to you.
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