The secret to becoming rich

in money •  8 months ago

Yes, got your attention. And I will also deliver. The secret to becoming rich is simple. You have to have what can be called the rich mindset.

The rich mindset

So what is the rich mindset? It is simply put, a way to think about your financial actions that the rich usually have. I know you want to get a simple answer, a fast trick to turn your life around and become rich tomorrow. Well, the trick is in part to be patient. Rich people don't usually become rich by accident. At least, if they aren't born rich or they don't win the lottery. Patience with financial actions is the number one part of the rich mindset. But it is only the start.

Know what you can afford

The next step is knowing what you can afford and what not. This isn't rocket science, but it involves math! Oh god no, right? Thankfully this is also easy, let me show you.

John has 1 job. He gets paid $2000 a month. How much can he spend per month?

Job = x
Monthly available money = y
Maximum amount to spend = z

x = 1
y = $2000

z = x * y
z = 1 * $2000
z = $2000

Simple? Yeah, I know, putting it like this makes it a lot harder than it actually is...

Anyway, lets continue:

John spends $500 on rent per month. He spends $250 on food each month. And he spends $500 dollars on other stuff each month, because he really likes living to fullest. How much money does he have at the end of the month.

rent = $500
food = $250
other things = $500

I'll speed this up this time:

Left after month = $2000 - $500 - $250 - $500
Left after month = $750

So John has $750 left after a month and he can save that. If he puts it in an index fund, he will start to grow his money. John also knows, that despite having $750 left, he doesn't have to use it for something he doesn't need it. Good job John.

Finding income streams

The rich are always looking for income streams. This appears to be one of the most shocking things to many people. They do not seem to realize that to become rich, you have to get money. Many poor people say that they don't actually care about money that much and how much they have isn't such a big thing for them. At the same time they are struggling with everything related with finance and they wish they didn't have to bother with it. So the real question usually is, do you want to have negative or positive problems with money? Negative being, not enough money. Positive being, what to do with all the money you have? The rich therefore usually figure out how to make their money make money for them. They create what is called passive income.

Passive income

Passive income is income which generates money weather you sleep or work. Many start from having a passive income of only a few dollars here and there. But when they invest that few dollars back into their passive income generator, the passive income generator generates more next time. Enter, compound interest.

Compound interest

This is awesome. Imagine your money getting babies. Yes that is what it does! Your money makes more money, and the more money you have, the more money it makes! And it just keeps going.

I got side tracked while writing this and am not sure what I had in mind in the beginning, but this is anyway what the rich understand and you should too to generate wealth and have a chance at becoming rich some day. Thanks for reading. Until next time.

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Finding new streams of income and having passive income is myth for larger population.

Majority thinks passive income is what you get wihout doing anything, but they dont know that it must be result of some real hard work or some smart investment which is source of passive income.

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Passive income is certainly my goal. Though passive is a slight misnomer, for example having a couple of rental properties is what some people think of as having passive income which is partly true - you don't have to turn up from 9 - 5 at your properties but you do have to keep them up to standard, make sure the rent is being paid etc. If you have investments you have to watch over them and hopefully keep your cash working at the optimum level.
I'm not sure totally passive income exists even if you can employ someone to keep look after your investments its best to keep an eye on the person you're employing too.
But.... being able to watch over your investments from your holiday villa in the Caribbean and knowing that you are earning money while you sleep is a pretty nice position to be in and I would take that kind of work over the 9 - 5 any day!

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You're right, many people don't realize that passive income is a possibility to many, not just the few. It might take some effort, and should take some effort to figure out how to get your own source of passive income. Otherwise you won't understand where it is coming from. But once you have it, you have it.

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Actually Passive income is most mis understood word. Sometimes the very people who teach how to achieve passive income are just creating passive income for themselves only they dont have any solutions for commen people.

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