You may have asked yourself in the past “why do the rich seem to get richer?” I see people question this exact thought every single day. I completely understand how unfair it feels when you see millionaires accumulate wealth like it’s nothing. What I was always ignorant too was actually understanding how the rich managed to become more financially profitable.
People with access to wealth are always quite successful in their field of expertise and rightfully so. But it isn’t their position that gets them financial success. It is their ability to identify problems within our community and develop a solution, in which they sell. A great example is the technological entrepreneur Elon Musk. Elon cofounded what we know as Paypal. Himself and his colleagues saw that the internet was the future in consumerism and they quickly realised that they needed to give people a quick and easy way to pay for things digitally, as eBay was starting to pick up some momentum. They invented Paypal so that users could gain safe and quick access to online transactions. In October 2002, Paypal was sold to eBay for $1.5 billion. So with a mind focused on the future, Elon Musk developed a platform that was a gold mine!
The rich also acquire assets in the form of realestate, stocks and bonds. These assets are always changing in value, with appreciation being the likely scenario over a long term strategy. The rich spend their money on realestate, stocks and bonds instead of cars, smart phones and clothes. In the long term, these assets bring in enough money for these individuals to be able to buy nice cars and clothes. But the principal is this.. Invest your spare change now and consistently so that down the track, you see returns that will pay your bills! Before I move on, I just want to state that this is general advice on what I have learnt from investors such as Warren Buffet and Stefan James. I am no financial genius whatsoever and recommend you seek professional financial advice before making any sort of investment. I am just sharing knowledge that I have discovered useful for myself that could prove useful for you as well.
Lastly, this one is the easiest to implement into your life right now. If you wish to become more financially flexible you need to stop wasting money! This is something I was always doing myself. Consumerism is addictive and dangerous! If you take a step back and have a hard look at society, you will notice a recurring habit. Everyone is focused on the next big ‘toy’. We all have at some point been caught up in a destructive cycle of constantly wanting the new big thing like an iPhone, or the best shoes etc. These purchases whilst they are nice, do add up quite quickly and can put strain on your financial situation.
Not only are big expenses chewing at your chance of financial success, small purchases are also contributing. A small purchase can be anything. We all have our addictive purchases. Mine is coffee. I love coffee and I find myself spending more than I should on coffee and whilst $4.00 doesn’t look like much upon purchase, it surely adds up at the end of the week!
To recap, the financially free develop a mindset on fixing problems, acquiring assets and budgeting (to prevent wasting money) in order to grow their wealth, resulting in their riches becoming richer.