What does being rich really mean to you?

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Big house, big car and bags of money?

 

Build the wealth you need to survive and prosper

By taking care of your money, you’ll build wealth. By monitoring your expenses and spending your money sensibly, you’ll build good judgment and by eliminating money worries with good advice, it will leave you in better health and with a better attitude to life. However, being rich means different things to different people.

Things are not always what they seem. This man could be driving a funeral car, is parked outside a funeral parlour and he is delivering the money to the bank for the boss?

 

A good question to ask

Who is “rich” and what is “fair”? According to extensive surveys by Dr Stanley in the USA, the most productive accumulators of wealth spend far less than they can afford on homes, cars, clothing, vacations, food, beverages, and entertainment.

Answers are largely a matter of opinion. But here is a fact: IRS figures show that the top 10% of income earners make 43% of all the income and pay 70% of all the taxes. Is that fair? If not, how much should they pay: 75%… 90%… all of it? And how about the now widely recognised fact that 47% of Americans don’t pay any income taxes. Is that fair? According to the IRS, the top 2% of income earners – the ones that just had their marginal tax rate raised 13% to 39.6% already pay approximately half of all income taxes.

Leave aside the truism that you are rich if you enjoy good health, a loving family, close friends and varied interests. Politicians (and most voters, apparently) seem to believe that a person’s wealth can be determined by his or her income. I would argue that you determine real wealth by looking at a balance sheet, not an income statement. But why not look at both?

How do you get rich if you aren’t currently?

As Dr Stanley says, the basic formula is pretty simple: Maximise your income by upgrading your education or job skills. Minimise your outgoings by living within your means. Religiously save the difference and follow proven investment principles.

According to extensive surveys by Dr Stanley, the most productive accumulators of wealth spend far less than they can afford on homes, cars, clothing, vacations, food, beverages, and entertainment.

 

“It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy”. George Lorimer

 

The would bee’s if they could bee’s, on the other hand, people with higher-than-average incomes but not much net worth, are merely ‘aspirational’. They buy expensive clothes, top-shelf wines and liquors, luxury cars, powerboats, all kinds of ‘stuff’ and often more house than they can comfortably afford. Their problem, in essence, is that they’re trying to look rich. This prevents them from ever becoming rich.

It surprises many, but the vast majority of millionaires in the United States:

  • Live in a house that costs less than $400,000.
  • Are more likely to wear a Timex than a Rolex.
  • Generally, pay $15 or less for a bottle of wine.
  • Have never paid more than $400 for a suit.
  • Are more likely to drive a Nissan than a BMW.
  • Spend very little on prestige brands and luxury items.

Yes, they’re frugal. But they’re also happy, not to mention financially free. They are not dependent on their families, their employers, or the federal government. What a feeling.

Some can’t abide by this important lesson, but the bottom line is clear: If you want to be rich, you have to stop acting rich… and start living like a real millionaire.

 

[read more=”Personal Experience” less=”Personal Experience”]

Personal Experience

Most people dream of being rich at some time in their life. I think that the vast majority of business owners have no expectation beyond having a good business that meets their family wants and needs.

While I have made a lot of money and lost a lot of money during my business career, it has not been because of my desperation to be rich. From my point of view, having money is good simply because you can make things happen for other people more quickly if you have it. If you don’t you find other ways to make things happen.

If your ideas and opportunities are good enough the money and resources will surely follow as if by magic.

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