- So, when I was a kid I can remember living nearby
somebody who had the nicest cars,
they had a beautiful house,
and all the kids always had brand new clothes
and all the greatest toys and gadgets.
I can remember one day going up to my dad
and saying, when I grow up I wanna be as rich as them.
And that is when my dad looked at me and said,
that they are actually poor.
That was one of the most surprising moments
of my entire life that I realized that most people
who look rich are actually broke.
That's what I'm gonna share with you guys today in
this video, is how rich people actually spend their money.
And really, it's quite simple.
I can summarize this in about 10 seconds.
Rich people are busy being rich
while poor people are busy looking rich.
I wanna give you guys three prime examples here
of the three differences between how rich people spend
their money and poor people spend their money
on some of the largest life purchases,
and then just buying unnecessary shi
that you really do not need.
First of all let's talk about the method
of transportation.
For a lot of people this is your second largest expense
next to your home.
Let's go ahead and talk about the type
of car a rich person drives versus the type
of car a poor person drives.
For this example here a rich person
is going to buy a three to five year old Toyota Camry,
very reliable vehicle and it's not a car that's expensive.
Their car payment for this vehicle would be around $250
per month and the insurance costs around 75.
The cost for that economy vehicle
for this rich person is $325 per month.
Now on the other hand, a poor person is more concerned
with how they look and what other people think of them
so they're going to buy a brand new vehicle.
The most popular luxury vehicle is a Mercedes-Benz C-Class.
Now the monthly car payment for that car
would be probably around $810 per month
and your insurance costs would be more,
so we're gonna assume $150 for insurance.
Giving this person an all in vehicle cost of $960.
The poor person is spending almost a thousand dollars
per month on the luxury vehicle, a depreciating asset,
to impress their friends and family.
Meanwhile, the rich person is spending significantly less
and keeping that money in the bank.
But just how much is this rich person saving
and what are they doing with the money they're saving?
That's what we're going to discuss at the end of the video.
Let's talk about the second major purchase of your life,
which is your home.
What type of house does a rich person buy,
versus the type of house a poor person buys?
A rich person is going to buy a small house.
They understand that extra space is a waste of money.
It's going to be more space to clean,
more space to heat and cool,
and the smaller your space is the better.
They're gonna buy a reasonably sized 2,000 square foot home.
Their mortgage for this house
is gonna be around $700 per month.
They're going to be paying about $250 per month in taxes
and their utility bill is gonna be another $250.
Their all in housing cost there is around $1200 per month.
A poor person on the other hand,
they want the big house, they wanna keep up with the Joneses
and they're gonna buy a huge house,
a 4,000 square foot house.
And as a result, their mortgage is gonna be twice
as expensive, a $1400 mortgage now.
And the taxes are gonna be double that as well,
a $500 a month tax bill and they have more house to heat,
more house to cool and they're gonna
have a higher electric and utility bill at $500 per month.
So that poor person is spending $2400
a month on their housing expenses.
In order to keep up the status and to impress their friends
and family, this poor person is paying twice
as much for their all in housing expenses,
compared to what the rich person
is spending on a reasonably sized house.
The third thing you see a lot of poor people spending money
on is clothing, they want to wear designer jeans
and designer clothes.
Rich people understand that clothing is simply stuff
to put on your body and nobody gives
a shi what the logo is on your shirt.
I challenge you to go find somebody who is truly rich,
a family member or a friend and ask them
how many Gucci belts that they own.
I'm pretty sure the answer is going to be zero.
99% of the time it is these poor people
that are pretending to be rich
that are buying designer clothes to fake the appearance
of being wealthy or being rich.
And to be honest, a lot of people are fooled by this
but when you start to look through this
and understand that is just a facade,
that's when you begin to understand that these people
are in reality poor and just trying to keep up appearances.
We're gonna assume that the rich person in this example
is not spending a ton of money on clothing.
Maybe they go shopping twice a year
and if you average it out they're spending
about $20 a month on clothing.
But the poor person wants to have the designer clothes,
the designer handbags, and they're spending let's say $200
a month and for some people
that could be their weekly clothing budget.
But the difference there is that the rich person understands
that clothing is simply something you cover your body with
and you wear it until it is no longer functional.
Meanwhile, a poor person is gonna continue to buy clothing,
they're gonna fall for the brand,
they're gonna make these brands rich.
They're gonna hand their money over
and they're gonna buy new clothes every single season
because it is out of style.
So, how much money is this rich person saving all together
by not spending a massive amount of money
on a car to impress their friends,
and a gigantic house, and buying clothing just
to fake the appearance of being rich?
Well they're saving $635 a month by not driving
an expensive luxury car, they're saving $1200 per month
by not living in a gigantic house to impress their friends
and they're saving $180 per month
by not buying designer clothes
to fake the appearance of being rich.
All together, they're saving over $2000 a month
and that right there is what's gonna
separate the rich people from the poor people.
What they're doing with that $2000.
They're not out there buying clothes.
They're not gonna go buy an expensive car.
They're going to buy something called assets.
To put it simply here, assets are going to put money
in your pocket and liabilities are gonna take money
out of your pocket.
Rich people buy assets, poor people buy liabilities.
Let's say for example, say that this rich person takes
that $2000 a month of surplus, $2015 a month to be exact
and they invest it in the Stock Market
which historically has about an 8% return per year,
if they invest that money from age 25 to age 45,
they will have over 1.1 million dollars.
They're gonna be retiring at 45 years old.
Meanwhile, that poor person is going to work
into their 60s or into their 70s or work until they die
because they never understood this lesson
of actually being rich versus pretending to be rich
and keeping up with appearances.
Anyways guys that's gonna wrap up this video.
I'm sure this is a lesson a lot of you have learned before
but if this is your first time hearing this,
please share it with a friend or a family member
or somebody you know who is in this kind of lifestyle trap
where they're buying things to impress other people.
I think this video could help a lot of people out.
Thank you so much for watching.
I hope you have a great day
and I will see you in the next video.
If you are interested in learning more about investing
in the stock market,
I've created a free course just for you.
The link is in the description below.
Here are a few other videos you might enjoy as well.
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