Here's 4 lessons that I learned from studying wealthy people that we can all apply to our
own lives.
Number 1 is going to be live below your means. If you make $100k per year but you spend $100k
per year. At the end of the year you're left with nothing, you're still broke. If you make
$50k per year but only spend $40k per year at the end of the year you have net worth
of $10k. If you continue to work hard and make money monday through friday and spend
it on saturday and sunday and all the bills you have... You're never going to get ahead.
Because you spend everything you make! Usually the excuse is something like well, I have
to pay these bills / this is the certain way I have to live. But the majority of the time
you're actually inflating your lifestyle with the more income you make. For example, I bet
5 years ago or even less than that, 3 years ago, you were probably making a lot less per
year than you are now. But 5 years or 3 years ago you were living just fine. You were able
to eat, you still had shelter and you were still able to do fun things too. But here
we are 5 years later and you're making more money but you're continuing to inflate your
lifestyle to spend everything that you make. It's a pattern you have to break. Wealthy
people have figured out that lifestyle is going to create so much stress living paycheck
to paycheck and you only have a couple thousand or a couple hundred dollars in your bank account
in case an emergency happens. You're also going to have nothing left over to invest
every month. If that is you right now there is certainly things you can cut down on in
your own life. Or make it a goal that every time you get a raise or promotion you don't
just end up spending more money on your lifestyle but that is money that is going to get saved
or invested. And the best way to live below your means is to live with a budget, so you
have control over your money. Wealthy people know how much money they're making and they
know how much money they're spending on certain line items. Where as broke people, have certain
money coming in, they know they get paid $1k or $2k, whatever it may be every week. And
then they know they have a certain amount of bills but as long as their bank account
stays the same they're "Good". But that is not going to help you get ahead, you need
to create a budget. So you actually know what money is coming in and what money is going
out.
The second lesson is going to be wealthy people plan for the future. Broke people are very
short term minded. How am I going to make it through the month, how am I going to make
it through the week. When you plan more for the future the present becomes easier. For
example, I see this a lot with investing. It's so hard to play catch up with investing.
Where as if you start investing early and often you're on so much of an easier track
to become wealthy.
Just look at this chart: If you do $500 per month from now until age 60. If you start
at age 20 you're going to have over $3million dollars! That's going to make your future
a lot easier and a lot less stressful. But if you start at age 40 or age 50 you are only
going to have a $100k left and that's not enough to retire on! But the difference between
those two people; the 20 year old and the 50 year old, they're both putting the same
amount of money away every single month. But, the early you plan for the future and the
earlier you invest it's so much easier. If you haven't started investing seriously you
need to start today. As long as you have an income you should always be investing.
The third main thing I learned about wealthy people is they build assets not liabilities.
An asset is something that brings you money. A liability is something that costs you money.
Broke people are more focused on, "How many more liabilities can I buy?" Because If I
buy more clothes, more cars, that's going to make me wealthy. When in fact, that's not
contributing to how much your worth at all. That is not helping you build your wealth
at all. That is just costing you more and more money. An asset is something that own
such as a business, rental properties that can bring you monthly income, or even your
401k account, your investment accounts that are continually bringing you in money. When
you understand that you should focus more on assets that buying liabilities the assets
will eventually pay for all the liabilities and more liabilities than you could have ever
imagined affording. This is how a wealthy person will look at this chart...
The more assets they build the more liabilities they can afford. They take their income and
they first think about, ok how can I add to my investments? How can I add to my real estate
portfolio? How can I add to my business? So that it will create more income for me to
be able to afford my liabilities. A broke person is going to take their income and skip
right over assets and go to liabilities. Again spending everything they make just on liabilities.
And at the end of the day they have nothing to show for it. Assets can give you that passive
income- Where you work really hard one day and whatever you made that day, whatever you
bought that day, whatever you created is going to continue to bring in income. It gives you
the ability to make money while you sleep. Something a liability will never be able to
do.
The fourth and final lesson from wealthy people is going to be continual education throughout
your entire life. Everyday, every week, every month try to be learning something. When you're
at the gym instead of listening to music, listen to a podcast that is going to help
you learn something that you didn't know before. Read a book. I used to hate reading! I never
read books ever. Until I realized this fact, this lesson, that wealthy people read books.
So I forced myself to read books. And every time I read a book it got easier and easier.
And I realized, Wow, I can learn a lot from this. Audio books can help to if you like
listening to books if you're driving to work. Instead of just zoning out and listening to
the radio. Whatever you do or however you do it make sure you are continuing to learn
things about investing, about self development. Whatever job you're in, whatever you like
to do for fun. Even the more you learn about whatever you do for fun, the better you're
going to be at it and the more disciplined you'll become. And you don't always have to
learn things from books or podcasts from people you don't know. Surround yourself with smarter
people, learn from smarter people. Have a mentor, someone to look up to. Try to emulate
someone at your job that you respect and you're like "Hey, that's someone... I want to be
there if 5 or 10 years from now". And go out of your comfort zone to put yourself in tough
situations. You learn the best through practical application. Actually experiencing it yourself,
you are going to learn so much more than if you just read it in a book. It's a scary thing
to do but if there is a tough situation at work you need to put yourself in that situation.
Or if it's at home. Or if you wanted to try something new but you're like... Man, I don't
know if I could do that. No matter what happens you're going to learn something from it! And
that is going to help you with this lesson that you need to be continually educating
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