How the Rich Think About Money
The rich have a secret that they are keeping from you. If you never learn this truth, you will stay in the perpetual cycle of the poor or middle-class.
If you are to ever break the cycle, and begin to grow your wealth, not only do you have to learn the secret — but you have to change your perspective and live it every day. Here it is:
Money isn’t real.
That’s right. What we call “money” has no intrinsic value beyond the cost of the ink and the paper it’s printed on.
We have become so divorced from reality in the last 50 years or so, we are fooled into working for pieces of paper!
Instead you need to think in terms of what is real, and what is not. You can’t eat cash. You can’t live in cash. You eat food. You live in a house. Cash is nothing but a medium of exchange.
In fact, the paper stuff we carry around, or the digital amounts in our bank accounts, is not even money at all. It is currency. And the values of all the currencies across the globe are eroding now faster than ever.
So what is money?
Real money has these qualities:
- it must be a medium of exchange
- a unit of account
Money must have all these attributes plus be a store of value over time. Clearly, our currencies are not a store of value, as what we can buy tomorrow with a dollar is less than what we could have bought yesterday.
Develop a Wealth Mindset
You should never work for money, only the assets you can trade in return for that cash.
To make a generalization to illustrate my point: Poor people spend their dollars on living expenses. The middle class spend their dollars on houses, cars and boats. The rich, on the other hand, use their dollars to buy assets that return them more dollars (then those dollars buy more assets and toys etc.).
So the middle class pour currency into liabilities; things that cost you money. The wealthy keep and build their wealth by putting it into cash-flow assets (like a business, or apartments) and other investments.
With a wealth mindset, you can begin to grow your wealth (no matter how much cash you have now), and make your “money” work for you. So, trade your cash for something real (an asset, NOT a liability) before its purchasing power is inflated away.
But I earn interest on my savings account, why shouldn’t I just leave it in the bank? High-net-worth individuals and companies don’t store their worth in cash. When you run the numbers with the real rate of inflation (not the figures your government releases) you’ll find that you are being robbed, quite literally, every day.
If you get confused, just ask yourself this question: “Am I buying an asset or a liability?” If it costs you money, it’s a liability! Yep, even your house is a liability.
You can’t keep currency (it loses purchasing power daily), as it’s not a good store of value. It is only a medium of exchange. Burn this into your brain, as it’s a major difference.
Start to make the mind shift between working for money, and working to buy real assets (because money isn’t real). This shift in perspective will totally change your attitude towards work, goal setting, and how you plan for your financial future. And don’t worry if you don’t currently make a large amount of cash, it’s the mindset and understanding that is important. If you use your dollars in they way I have described here, you’ll be able to keep what you have, and expand it’s real purchasing power into the future.
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