Have you noticed how the poor seem to be getting poorer, the middle class have loads of debt, and the wealthy are even more powerful and rich than they were before? Many people consider this a mystery, but it’s actually quite simple. Attaining wealth is all about discipline and what you purchase. It is because of this that the poor and the middle-class have practically nothing in their bank accounts, regardless of the time of year (or decade) that you would choose to view them.
The Poor Have Little and Buy Short Term Thrills
Those that have little do not have an easy life in this world. They barely make enough to survive and they never experience the big thrills of traveling abroad or owning a large home on the lake. It is more likely that they live in a small apartment, they do not travel, and have a very slim selection of what they eat from day to day.
However, even though it is true that the poor do not have much for income, they are not helping their situation with the common things they typically purchase: cigarettes, lottery tickets, fast food purchases, and impulse buys from the mall. These purchases cost quite a lot when considering their total yearly income, and they have very little sellable value (even immediately after the purchase).
The poor stay poor because they do not use their small amounts of excess cash on long term investments. They merely buy short term pleasures.
The Middle Class is Stagnant and Their Debt is Growing
The middle class has plenty of income (often more than $50,000 per year), but their wealth is stagnant and they are racking up more debts than ever. Student loans, car loans, and home mortgages are piling up and the middle class find themselves with very little wealth. So if they have the appropriate income for attaining wealth, why is it that their bank accounts remain empty and their debts are growing? It’s all about what they are purchasing.
The middle class are thankful that they are not poor, but they truly just want to live like the rich, so they end up buying things that they truly cannot afford, like boats, expensive cars, and houses that are bigger than their bank account can handle. In reality, the middle class act like the rich, but in doing so, they are just racking up depreciating assets, which just continue to make them hard up for cash and leaves them with nothing to invest for the future.
The Rich Are Getting Richer
Instead of people acting as though they are rich, they should really be studying how the rich are actually becoming wealthy so that they can do it themselves. So how do the rich do it? How is it that they can continually improve their financial status again and again? Again, it’s all about what they are buying.
Unlike the poor, the rich are not throwing their money away with senseless purchases, and unlike the middle class, the rich are not going out and spending all of their excess cash on cars and boats. Instead, they are putting their money toward investments that will then net them even more money. Then, they take that money and reinvest it for more, and do it again and again, while occasionally using a small portion of their earnings to buy a vehicle or a boat along the way.
Many people assume that the wealthy invest more than others because they have the means to, but I look at this phenomenon much differently. I say that the rich invest more because they understand what it can do for them. They have wealth because they are long term thinkers and realize that by denying themselves the small pleasures today, they can experience much greater pleasures later in life.
Do you think like the poor, the middle class, or the rich?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.