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How Do The Rich Stay Rich?
1. Teach your children well: Wealth management firms have all jumped on the bandwagon of family education and next-generation programs—and with good reason. Bad investing decisions and poor basic budgeting can lead many families from "new money" to "no money." Education programs shouldn't just focus on investing, though that's important. They should also focus on budgeting, spending and the responsibilities that come with holding multigenerational wealth.
2. Place your trust in trusts!: Trusts are not only a great way to shield assets from estate taxes and capital gains taxes, they are also a great defense against family spendthrifts and playboys. Trusts can also insure that the values and wishes of the original wealth creator are carried out through the generations. And they protect assets from gold diggers and other non-family members who might try to make a money grab.
3. The Rich are Financially Literate: What is a ‘financial education’ and how does it differ from, say, ‘traditional education’? A ‘traditional education’ shows people how to perpetuate the trap. While growing up, how many of us were told, ‘Get a good education, so you can get a good job and a nice paycheck’? That is exactly how most of us are programmed from birth. A ‘financial education’ teaches us how to leverage money to make us rich, rather than the other way around. But to expand further on this; the rich understand inherently the difference between an asset and a liability.
An asset is something that puts money in your wallet.
A liability is something that takes money out of your wallet.
The main difference between the rich and the poor is that the rich make their money by investing in assets and the poor spend all their money on liabilities disguised as assets. A good rule of thumb to reflect on when considering an investment is this: ‘Will this continually put money in my pocket, or take money out of it?’
4. The Rich Mind Their Own Business: When we work for a company, we are not minding our own business; rather, we are trading our time for money and making someone else rich. When we mind our own business, we make ourselves rich. A successful business owner or entrepreneur realizes that their livelihood revolves around building assets, not income. A true business runs without requiring an owner’s presence. Stop and think about the profound nature of that statement. Because if you have to work at your business, it is not a business, it is a job. And you are, again, trading time for money.
6. The Rich Invent Money: Rich people are often creative, educated and take calculated risks. Rich people do not sit around waiting for the right opportunity to create wealth to come along. They create opportunities. They seek out opportunities that yield financial success. Rich people capitalize off of ideas and agreements, rather than the pursuit of a dirty piece of paper, because they realize that money is not real. It is an idea. Therefore, they leverage the power of an idea, and invent ways to generate cash flow into their lives.
7. The Rich Work to Learn, Not to Earn Money: Having great talent is not enough. One must continually grow, educate themselves, and accept and adjust to changes. They must recognize that changes bring great opportunities to create wealth and consistently evolve through proper learning to recognize the changes before they come. This is how the rich continuously become rich despite the economy. They are masters of change, rather than victims of change. In addition, the rich constantly educate themselves in sales and marketing. They become experts in communication skills such as writing, speaking and negotiating.