Many high income earners (or rich people) often do not have a large amount of wealth. Let's talk about the difference on how wealthy people and high income people use their money.
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Chapters
00:00 Start Here
00:41 Rich People Buy Liabilities, Wealthy People Buy Assets
02:21 Rich People Have A High Income, Wealthy People Have A High Net Worth
03:54 Rich People Live Above Their Means, Wealthy People Live Below Their Means
05:07 Rich People Make It Known, Wealthy People Hide It
06:36 Rich People Expect The Best, Wealthy People Expect The Worst
08:20 Rich People Count Dollars, Wealthy People Count Pennies
09:49 Rich People Value Stuff, Wealthy People Value Time
Over half of six figure earners are living paycheck to paycheck and reason is become of how they view and manage their money. In this video I talk about 7 key differences between "rich" people and "wealthy" people.
1. Rich People Buy Liabilities, Wealthy People Buy Assets
The biggest difference is rich people buy liabilities, which are things you owe or bring you financial burdens like a car, debt, or high mortgages. Whereas wealthy people buy assets, which are something that generate cash flow like stocks, savings, and retirement accounts. Liabilities make it hard to grow wealth and assets make it easy to grow wealth.
2. Rich People Have A High Income, Wealthy People Have A High Net Worth
Just because you have a high income doesn't mean you have a high net worth. A person making $50,000 a year could have a higher net worth than a person making $100,000 a year because of how they spend their money. Rich people have high expenses and do not have a lot of money left over to grow there wealth. Whereas wealthy people keep their expenses low so they have more money to build their wealth.
3. Rich People Live Above Their Means, Wealthy People Live Below Their Means
It doesn't matter how much you make, if you have high expenses, you can still go broke. Rich people often live large and create high expenses cancelling out the significance of their high income. Wealthy people live below their means and use more money to build their assets.
4. Rich People Make It Known, Wealthy People Hide It
We often think that wealthy people are people who flaunt their wealth because of how the media portrays it; however, this is not true. Rich people follow this superficial imagine of wealth by making it known through their material possessions. Whereas true wealthy people hide their wealth and do not feel the need to make it known.
5. Rich People Expect The Best, Wealthy People Expect The Worst
Many people with high income think they are immune to surprise financial events like losing their job because of their high income and do not prepare for bad times. Whereas wealthy people know that they are not special and prepare for bad times. When bad times come, rich people are affected, but wealthy people are prepared.
6. Rich People Count Dollars, Wealthy People Count Pennies
Once people start making a lot of money, they no longer focus on smaller expenses, which ultimately becomes a big expenses. Wealthy people, however, focus on being intentional with every purchase because they know that small things add up.
7. Rich People Value Stuff, Wealthy People Value Time
Money can buy you two things: stuff and time. Rich people often use their money on stuff and have less time. Whereas wealthy people use less money on stuff and more on time to do the things they want.
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