The key to wealth is not what we earn. It is in what is spent on us.-Warren Farrell
Money, creating wealth and the income gap between the upper, middle and lower classes are raging debates that will not end anytime soon.
Why? The wealth gap between the rich and the middle class widened tremendously to record levels since the great depression
A new report published by the Pew Research Center in the United States of America show that the wealth gap between America’s rich and Middle widened to record levels.
The typically wealthy American household now has 7 times the wealth of the middle class.
Creating wealth is about doing things differently
One reason identified as the accelerator for the wealth gap between America’s Rich and the working classes was the difference in how the upper class and middle class accumulated wealth.
Upper-Income families invested in the stock market and other assets classes. The middle-class families relied on earning higher income that stagnated. They also held their wealth in their personal homes and 401(k) that declined in value during the recession
Don’t Make this mistake about wealth creation
That is why the greatest mistake, you can ever make creating wealth, is to work for money.
Why? Because when you work for money, you are less likely to become wealthy
What makes you rich: is having money work for you instead of working for money.
Wealthy individuals have learned how to invest money to create valuable assets. These assets then generate income that support their lifestyle
The wealthy know how to work fiscally for money instead of physically working for money
I think it’s worth repeating that: wealth is created by fiscally working for money instead of physically working for money
Therefore, in order for you to become wealthy you must start thinking differently about building wealth
If you are reading this and thinking…
What do you mean by “think differently about wealth? It means you must begin to think about building wealth with an entrepreneurial mindset
Not sure what this means? Then….
I want you to answer the following questions:
Are you curious about how why wealthy people can afford long vacations?
Are you interested in how some individuals grow richer every day without working harder?
If you answered yes to any of these questions, then it means you don’t understand the process of building wealth.
Today I am going to let you into a simple yet often ignored habit that wealthy and successful individuals do when it comes to money.
The secret to building and preserving wealth is this- don’t work for money. Instead, make money work for you.
If you adopt the mindset of- making money work for you- you have a higher chance of building wealth.
So how do I get money to work for me instead of working for money”
It starts with you having an understanding of real wealth, knowing how to create it and preserve wealth
Let me explain…
What is wealth?
Wealth is any store of value. True wealth means any asset you have that has potential to generate income.
I want you to notice that I did not mention money. The key to wealth is having an asset that produces income
When you shift your thinking from looking at wealth creation from having physical cash to the lens of an asset that produces income-you’ll begin to see why wealthy individuals become richer without working physically for money
Here are some examples of assets that create true wealth:
- Financially valued skills (marketing, sales, copywriting, management skills)
- Business ownership
- Royalties from intellectual property and works of art
- Income producing real estate
- Cash deposits in Interest bearing bank accounts
- Owning of stocks and shares
Real wealth comes from having assets that generate passive income.
You become wealthy when you have assets that generate passive income that is enough to pay for your lifestyle even when you are not actively working.
You now know the meaning of the wealth. The next question is:
How does wealth creation happen?
The answer is easy. Wealth creation occurs when you bring value to the marketplace.
Why? Because any time, you create a product or service that settles a need in an industry you create value in that industry.
For example, when Thomas Edison invented the electric light bulb he created a valuable product that solved the problem of lighting.
Bill Gates created value in personal computing with Microsoft.
I want you to do this exercise:
Think of many other examples of wealth creation you’ve seen in other industries or around. This will give you a better idea of how to create value
The bottom line when you begin to view problems as opportunities to add value wealth creation follows.
Here is the formula for wealth:
Wealth = n times (value created)
Where n equals the number of people you serve
This means the more people you can serve the wealthier you’ll become.
Now to answer the final question that is how is wealth maintained.
How do you preserve wealth?
You preserve and grow wealth by adding value to the marketplace, then saving and investing the proceeds of your income
It’s important that you understand the secret to growing and maintain wealth.
Why? Because its possible that you can build wealth and then lost it in a short time.
There are many stories of individuals who amassed fortunes and then lost it.
The stories of Mike Tyson, Nicholas Cage, and Dennis Rodman all remind us of how you can easily accumulate wealth in one breath…and then go bust if you are not careful.
That is why…
Your Cash flow pattern is crucial to preserving wealth
You see another secret to building wealth that last for a lifetime is to cultivate healthy money habits. How you earn and spend money is crucial in creating wealth
Why? Because the way, you manage your money is what decides your financial fortune
In his book Rich Dad Poor Dad, bestselling author Robert Kiyosaki concluded that you could predict a person’s future wealth when you look at his cash flow pattern.
Kiyosaki also found that an individual’s cash flow pattern tells a story about his mindset about money.
Kiyosaki identified three cash flow patterns that reflect an individual’s money mindset:
Poor cash flow pattern: A person with a poor cash flow pattern earns money and spends all his money on expenses. As a result, this individual has no savings or assets
Middle-class cash flow pattern: A person with a middle-class cash flow pattern earns a high income. But spends most of his income trying to look gorgeous.
He rides a luxury car, buys designer clothes and lives in a highbrow area. As a result, he spends more than he earns.
A person with a middle-class cash flow pattern may own a few assets, but he has little to show for his high income.
He may appear wealthy because of the outward appearance of his material possessions…but he is not affluent.
Doctors, lawyers, and celebrities and other high-income earners are individuals with this middle-class cash flow patterns
The Rich cash flow pattern: a person with a rich cash flow pattern is someone who earns most of his money from owning assets. In other words, individuals with abundant cash flow pattern have more assets than liabilities, that he makes more money than he spends.
Kiyosaki concluded that to build and preserve wealth you must have a rich cash flow pattern.
The author believes that anyone can develop a rich person’s cash flow pattern.
What you need is to change your spending habits. This means you spend your time and money acquiring assets instead of liabilities.
The greatest benefit to having a rich person’s cash flow pattern is that you’ll earn money even when you are not actively working.
When you have a rich cash flow pattern: you no longer work for money instead money works for you
Do you desire financial freedom?
If you said yes then here’s my advice…
In order to gain financial freedom you must make a commitment to focus your time and energy on learning how to make money work for you.
In other words, you need to stop working for money.
How do you stop working for money? The answer is easy
- Learn how to create more value.
- You need to Accumulate assets instead of liabilities.
- You need to keep growing your assets until you enough income to that you can maintain your lifestyle without working
Those are the keys to building wealth. Why not start using them to start your journey to financial independence?