Why the Rich are Becoming Richer and Poor are Becoming Poorer
This can be an intriguing question until you learn how wealth is built. The rich are becoming richer and the poor are becoming poorer because the wealthy understand that working a job is the worst way to get paid and the poor people use jobs as their primary source of income.
Why the Wealthy Stay Rich
The rich stay rich because they do not depend on jobs as their source of income. Since the rich do not work jobs, they use assets to get paid. Assets are typically things that generate a positive income monthly and may need little to no time to continue generating money. As a result, the rich get richer because they acquire more and more assets.
The reason why wealthy people depend on assets is because they do not require you to trade time for money like a job. With that being said, you can attain an unlimited amount of assets, and generate an income from them all. The more assets you have, the more money you generate.
After all this talk about assets, you might be wondering, what is an example of asset? A simple example of an asset is owning a book. You can invest time or money into a book, then sell it for income. If you created the book by investing time, every sell will be profit because you didn’t pay to have it created. However, if you did pay someone to write a book for you, the book would have to make enough money in sells to recuperate your initial investment, otherwise, it would be a failed investment.
As stated previously, the true power in this strategy is in the ability to attain infinite assets. You can own as many books as you like and you do not have to write them. Imagine if you owned 50 books that created income for you every month for the rest of your life, no matter if you go to work or not. If you’d like to learn how to get started with having books as assets, check out our recommended option for creating Amazon eBooks here.
The Education That Makes People Rich
Now that you’ve learned how wealthy people make money, you can see how their is simply an education barrier between the rich and poor. The rich simple learn more about asset generating topics while the poor learn how to get jobs. Furthermore, since knowledge can be shared, the wealthy learn from each other. For example, imagine if you would have learned the simple concept of assets while or before you entered high school.
The rich are getting richer because they share the knowledge within their circle any those around them understand or learn about assets. Moreover, you might hear the same information as them but, it goes in one ear and out the other. A wealthy person can say, you can own an expensive house and car like me if you own a business. A poor person may go out and finally acquire a business but works as a chief in it for forty years trading time for money. On the other hand, the wealthy person has a restaurant too except, he or she hired the staff to work while the owners are on vacation for the rest of their life.
How the Wealthy Use Debt to Stay Rich
Most of us are brought up to avoid debt and that it is a bad thing. The rich people get richer because they like debt. Now, you might be wondering, how does that make any sense? Debt creates bills and you lose money right? On the contrary, if debt is used correctly, it can generate a positive cash-flow with assets. Remember the E-book example earlier?
You could have used a $5,000.00 loan to get books written for you to possibly generate a positive cash-flow. A positive cash flow is, income minus expenses resulting in a number that is still positive or having cash left over. If you had a proven strategy for creating E-book, you may know that you have a good chance of turning your $5,000.00 loan into 50,000.00 over then next year. Now the loan does not sound so bad.
In this way, the rich understand money better and use it in a way to create more assets and continue to grow wealth. The more you see how the rich get richer, the easier it is to understand how it works. Moreover, throughout this conversation, we have only been using E-books as the asset. Imagine if it wear something bigger such as real estate.
Why the Poor Stay Poor
If you’ve read this far, you know why the poor stay poor. Poor people primary focus on getting jobs. With jobs, you can only make a limited amount of money per day. Moreover, you only get paid when you work. There is no option to gain multiple streams of income unless you retire. And by that time, you are typically old and have traded your life for a paycheck.
Poor people believe that by getting a better job or getting a raise, they are getting richer when in reality, this might be referred to as the rat race. So, a poor person will spend many years looking for good jobs and setting goals on reaching higher pay when, their life will not change for the long term. They may make a little more money but, more than likely, it will cost them more time; the most valuable asset in the world.
The Education That Makes People Poor
So, if you are brought up poor, you only have a poor person’s mentality until you have an epiphany or become fortunate enough to snap out of the rat race and learn how money works. A poor person might have a child and teach them that college is the right way to succeed, only believing that possible because the parent did not go to college. Unfortunately, not all people finish college and usually end up in debt, and this beings the cycle.
The student goes to college building debt to get a good job, which will allow them to look forward to trading time for money for many years. Because the poor person may be getting by, it will be looked at as being successful however, if the job is not enough, the answer will simply be, I need a better job or a raise which is the rat race mentality.
So, poor people are getting poorer because they are surrounded by bad information without thinking to reevaluate they best way to make money. It sounds too much like common sense to think that the way to get more money is to work good jobs. This will usually continue to be the mindset unless the poor person encounters the knowledge of assets and passive income; which are not taught in school.
How the Poor Use Debt to Stay Poor
In today’s society, company’s and banks have allowed those who can not truly afford something, be able to have something. For example, a poor person may get a credit card just to purchase the new iPhone. Since the phone company will allow a small payment plan to purchase the phone, the poor person has a liability and the cycle begins. Instead of using debit to get ahead, poor people use debit to buy things they do not need or liabilities.
Liabilities are things that have the opposite effect of assets. Liabilities take money out of your pocket every month. Using a loan to get a house is a liability. Living in an apartment is a liability. Renting furniture on a payment plan is a liability. All of these things, poor people attain thought debt and get stuck in a loop trying to pay off. And their answer is, I just need a better job or a raise.
Moreover, this pattern can continue until it leaves the poor person deep in debt. This is because after they finally do get a raise or a better job, they buy bigger houses or more expensive cars only to be left with the same amount of monthly cash-flow they had before they acquired the raise.
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