How Does The Rich Get Richer?
This is a question I have been asking myself when I just entered High-School but never actually looked into it. That was until I all sudden became a Senior and had to figure out some type of funding strategy to get me through college. I have accumulated a list of things that rich people like Buffet, Musk, and all of Capitalist in America use. These strategies will work for anyone who is willing to put them to practice every day.
- Get a Stable Stream of Income
- Optimize Saving
- Find a Profitable Investment With The Savings
- Reinvest Any if Not All Profits
- Be Patient
- Repeat Steps 2-5
- Get a Stable Stream of Income
Before you start making Millions you need to start generating a stable Guaranteed source of income. This means getting a job is required. You do not need to apply for a high-paying job for this to work.
Any occupation would do, having at least 1 stable source of income means that even if your investments backfire you are still secured. When I just graduated high school my first stable job was in ‘Stop n Shop’ minimum wage salary and was just enough to pay for my first semester of college.
Although, I would recommend a job that does not only pay you for just appearing to work but a job that pays you based on the quality of work. There are many realms of opportunities when it comes to picking an occupation that best fits your circumstances. Now for the readers that are young but still want to generate their own source of passive income having an allowance would also work.
2. Optimize Saving
Now, this is where the gears start turning! Budgeting your income is the first step towards generating immense wealth. The money that you worked so hard to earn is yours and you may do whatever you want with it. Money is a powerful tool and not everyone knows how to keep possession of it. Optimizing your savings and budgeting yourself allows you to keep your and allow you to generate more.
How do you budget and optimize savings?
You must first understand that 1/10 of all you is yours to keep. “But Michael you just said that the money that I worked so hard to earn is mine and I may do whatever I want with it”. Yes, but do you not have to pay your bills, pay for service providers, pay for the taxes, what would happen if you do not pay for those expenses. Budgeting out your expenses gives you a visualization of what is a liability vs. an asset.
A liability is a leak hole where you put your money but can not generate more from it or your life does not depend on that item, product, or service. An example would be having a youtube+, Spotify premium, Hulu premium, and paying for cable.
An asset is when an item, product, or service that you put your money into, and it is either giving you a return in investments or essential for everyday life. An example of this is your car, car insurance, and gas money. Optimize your savings eliminating as many liabilities and add those funds into your savings and investments.
3. Find a Profitable Investment With The Savings
Here is how the How Does The Rich Get Richer, INVESTING. They have their well-earned money to generate more money. Now there are many different forms of investments and everyone has risk. The most popular form of investing in Stocks and Crypto trading.
I am not a big fan of both of them, although they have the power to multiply your investment overnight, they also have the ability to leave you bone dry. If you are considering doing Stocks and Crypto trading, my best advice is to diversify your portfolios. “Do not put all your eggs in one basket”, do your research before going into such high-risk and high-reward trading. I will do a post on this topic sometime in the near future, sticking to ETF or Mutal Funds is the safest bet.
Stocks and Crypto trading is not everyone’s cup of tea, not mine either, there are other means of investing that may require a little work but can be fun. Finding a hobby that you like and turning it into a side hustle cooking, DIY, cleaning, and even talking. Start a blog like me, youtube, online store, REAL LIFE STORE! So many options invest your time and money into those and they will generate passive income for you. (sometime in the near future I will make a post of activities and step-by-step guides for them all. )
4. Reinvest Any if Not All Profits
Once you notice that your bank account is looking thicker than usual you will be tempted to spend your well deserved wealth. You must discipline, do your best to keep your money, since they are now your employees working for you. If you lose them all then who will work for you. When ever you make a profit it is best to take it and reinvest it to earn even more profit. Applying this skill to your everyday life will 100% make you rich, unless you get unlucky with the markets.
5. Be Patient
Some investments will give returns over time, patience is key in that matter. Wait until you have an army of workers (money) working for you before thinking you can quit your day job or buy liabilities. Money value change over time all you need to do is wait.
6. Repeat Steps 2-5
Repeating steps 2-5 consistently will give you a thick wallet and many rivers of income. First, get a primary source of income, any of your liking. Then optimize your savings, create a budget. Next, Find a profitable investment and create multiple streams of income. After that, reinvest any if not all your profits to create more profit. Thence, give it some time to build and multiple, soon you will make money in your sleep. Lastly, Repeat, repeat, REPEAT! Make it a habit/ lifestyle! That is how the rich become richer!