When people say they’re bad with money, they usually mean one thing: that they end up spending most/if not all of what they earn. One of my favorite lessons that I learned through Rich Dad Poor Dad was the concept of Assets vs Liabilities
Assets vs Liabilities
Assets are anything that generates money/wealth for you.
Liabilities are anything that takes doesn’t generate money/wealth.
That’s it.
If you prioritize purchasing income-generating assets instead of liabilities, you can accrue more wealth. This doesn’t mean you’re not allowed to treat yourself; alternatively, you could also redefine what treating yourself is:
Treating yourself can mean treating yourself to a better future
If you view saving up as a chore or a sacrifice, you may be less compelled to do so. Reshaping the narrative will encourage you to treat yourself to assets more.
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The Rich don’t work for money, they have money work for them
This part is incredibly tone deaf, but it’s true. And it’ll continue to be true as long as capitalism itself is around.
Imagine if you had Scrooge McDuck levels of money. Not even – imagine you had a MEASLY 1 billion dollars. I know, I know, a real pittance. If you invested that money all into the S&P 500, you could expect a 7% growth in your money after inflation (10% gain when unadjusted for inflation)*. You’d be making 70,000,000 a year.
$70,000,000. EVERY. YEAR
For parking your money in the stock market and doing absolutely nothing. So as long as you don’t spend more than 70 million dollars, your wealth is growing.
You can benefit from this too
Most of us will never even come close to obtaining this much wealth. Yet, people who are rich and ‘only’ millionaires employ the same strategies. It does take effort, strategy, and careful consideration (plus luck) to reach this level, however.
Ways that your money can work for you:
- Owning a business that requires little if any effort to run
- Stocks, bonds, portfolio
- Rental properties
- Generally any assets that earn you passive income
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