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 subscribe button below from our
life-changing content 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 if you want to go from the life you have
to the life you deserve then hit the subscribe button now