Hey boss in today's video I'm gonna share with you five ways the rich build
wealth that the poor don't and if you're new to the channel then hit the
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method number one they track everything if you ask the average person what
percentage of their income they spent on living expenses and entertainment last
month they likely wouldn't know you would probably get the same blank stare
if you ask them how much they saved last month this isn't shocking as 61 percent
of American adults don't employ any form of budgeting but if you ask a rich
person they will tell you that budgeting your expenses and tracking your spending
is critical to financial success many rich people use that two-step process to
budget their money first they determine their expected income for the upcoming
month this will include their salary or business income as well as possibly come
earned through their investments this total figure will be the starting point
when they employ the twenty thirty fifty budgeting method this budgeting
technique works by dividing your income in the following way fifty percent is
designated to living expenses like rent utilities and groceries the next thirty
percent goes towards entertainment costs like going out to eat or seeing a movie
finally twenty percent is meant to go right into your savings account once
their budget has been established the rich then diligently track their
spending most millionaires will connect their credit cards to apps like mint
that automatically categorizes or purchases into budget categories however
some millionaires still do things old-school for instance they will track
their purchases on the notes up in their phone and manually add the totals at
month's end either way the rich track their money because they know that what
isn't measured he isn't managed now while you may not feel like it's as
important to track your spending when you aren't earning a massive income the
truth is that the sooner you can start building good financial habits the
better the fact of the matter is that since you watched my channel I know you
will be wealthy one day so you better have the skills required to handle all
those million dollar checks you'll be cashing in the future method number two
they employ financial discipline if you ask any millionaire the key traits in
becoming rich they will surely mention discipline this is because discipline is
involved in all aspects of becoming wealthy for instance if you want to get
a high-paying job you have to have the discipline to
get a good education which takes years of intense studying in preparation or if
you become rich through building a business you will have to employ
discipline to work on your company even when your friends are out partying and
having fun and once you start making big money the discipline only becomes more
important you see it doesn't matter how much money you make you will never be
rich if you lack the ability to save and saving takes discipline it means driving
the car you've had for 10 years rather than spending thousands of dollars on
that new sports car you've had your eye on if you read any major financial book
or listen to any successful entrepreneur you will find that they consider saving
money as one of the foundations of building long-term wealth the crazy
thing is that according to CNBC 57% of Americans have less than $1,000 in their
savings accounts and 39% have no savings at all now I know saving money can be
difficult but there are a few methods that can help make it easier to put away
money the first method is to set up automated deductions in fact one of the
best things I ever did for my finances was setting up automated deductions for
my pay with my employer in essence what these deductions allowed me to do was
send part of my paycheck directly into a savings account instead of the full
amount going right into my checking account when I initially set up this
process I allocated 10% of my actor tax income to my segment account but over
time I have found that I'm able to up this amount to 20% and double my monthly
savings setting up these deductions helps you avoid spending your entire
paycheck meaning that saving money is guaranteed the other way to increase
your savings is to start earning more the truth is your ability to save is
restricted by how much you earn but sadly most people's only strategy for
saving more money is cutting costs now cutting cost is a great start because
you can realize quick wins in the saving Department but realistically you could
only reduce your monthly cost by so much you will always have to pay for things
like housing food and transportation meaning that if you want to take your
savings to the next level then you need to focus on the other half of the income
statement which is your earnings in my video how to make a hundred dollars a
day with no money I go over some simple but effective ways to increase
during come like tutoring freelancing or driving for uber or left now imagine how
big of a difference earning an extra $100 a day would have on your savings
earning an extra hundred dollars a day translates to roughly three thousand
dollars a month let's say you only save 75% of that extra income every month for
a year you would end up with 27,000 dollars in extra savings therefore
becoming rich is just as much about making money as it is about saving it
method number three they live within their means when most people think of
the millionaire lifestyle to think of rich people spending endless amounts of
money on designer clothes and fancy cars but in reality millionaires are quite
responsible spenders who live within their means and one of the ways that
they've been able to amass the wealth they have is by avoiding the income trap
you see when most people start earning more money they begin to spend more for
instance your standard sedan may suffice when you're earning $50,000 a year but
when you suddenly find yourself running double you may gravitate towards getting
a luxury vehicle instead this rise in spending can be attributed to what's
known as Parkinson's law Parkinson's law states that work expands so as to fill
the time available for its completion and in the financial context it means
that you will spend it up to the amount you have available and available doesn't
just mean the money in your bank which is why people will go broke and then
some by maxing out their lines of credit and credit cards the reason this
phenomenon takes place is due to a lack of financial control
unfortunately school teaches things like how to find the slope of a line or how
to write in cursive but it never teaches you how to create and maintain a budget
aka real life skills therefore unless you have family or friends who bestows
sound financial principles upon you then you are almost destined to run into
money management issues later in life this habit of living below your means is
especially important for those who run their own businesses this is because as
a business owner there will be good times when you're making significant
revenues and bad times when your business will decline but if you spend
well beyond your means when times are good then you will not be able to
weather the storm of harsh economic times likely causing your business to go
bankrupt once you master the art of living within your means
it can set you up perfectly to begin employing method numb
for method number four they put their money to work life is like a game of
Monopoly the person who owns the best properties on the board makes the most
amount of cash normal only do these investments make them positive income as
the game goes on but they can be disposed of for a significant lump sum
at the end of the game however you can only acquire these investments with your
cash which is why the rich put your money to work through investing
unfortunately when the average person gets paid
they either spend it or a best stick the money in their savings account now
putting money in savings account is definitely better than blowing it on
frivolous items but the problem with this method is that sending money to
your savings account every month will not grow your wealth the average savings
account yields just 0.09 percent interest annually which means that even
if you have $50,000 in savings you would earn a measly forty-five dollars in
interest this is why the rich make a point to put their savings to work
through investing and the earlier can start investing the better just take
Warren Buffett as an example Buffett bought his first stock at age 11 and by
strategically investing over the course of many decades has become one of the
wealthiest people on the planet but it's not just billionaires who practice
ongoing investing on average millionaires invest 20% of their
household income each year making investing a significant part of their
wealth accumulation strategy and if you think the millionaire's invest in
exciting products you may be surprised most millionaires invest in the same
things as the average investor like a Roth IRA and a 401 K but also send these
investments to include things like real estate properties and personal
development method number five they never touch the
principle at this point we know that the rich track your spending diligently the
employee financial discipline live frugally and put their money to work but
what really separates these wealthy individuals from the poor is that they
never spend their principal while they previously said that most millionaires
live frugally some do like to spend on luxury items and while you would think
that spending large sums of money would Rouge their wealth or even make them
poor it doesn't because they never touch the principle in financial terms the
principle is the original amount of money put into an investment for
instance if you were to buy ten and chairs for $100,000 that paid an
annual dividend of $2 a share the hundred thousand dollars you invested
will be the principal and at $2 a share or the twenty thousand dollars will be
the dividend income in short the rich never detract from the assets that are
already earning them income meaning that their wealth will never decline due to
their spending Rich Dad Poor Dad out there Robert Kiyosaki alluded to this
method of spending in a recent tweet where he said live it up buy everything
you want one caveat buy the assets to pay for them first Roberts been known to
use this basket of investment properties to fund his purchases like when he goes
on vacation or buys a new car unfortunately most people generate their
cash flow in the form of active income by trading time for money when you only
earn active income it means that any money you spend is directly reducing
your wealth as income earned but not invested will never grow to a point
where you can spend the excess cash it produces so what type of investments can
you use to make you passive income some of my favorite passive income methods
include investment properties dividend stocks and real estate investment trusts
otherwise known as Reed's investment properties allow you to invest into a
building with your down payment ie you principal enter in cash flows
through the profits you make from your tenants rent payments dividend stocks
are also great because they pay you quarterly or annually without you having
to reduce how much money you have in the market finally a REIT is a real estate
investment trust and essentially it's a company that owns or produces income
producing real estate you can think of a REIT as a mutual fund for real estate
investing and like a fund the way you own it is through buying stocks you see
when you want to stock in a read you are in a share of the profit which is
produced by that real estate investment it's a way to invest in real estate
without the hassle of being a property owner and every time profits are shared
you will receive your portion of the cash distributed and the best part was
that there was no property maintenance no dealing with tenants and know chasing
rent payments required in summation if you want to continue growing your wealth
while still being able to spend from time to time you must only spend the
income that your asses generate and never the principal thanks for watching
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