Saturday, February 13, 2010

What Makes the Rich, Rich?

Rich people are those who have the ability to live the lifestyle they dream of without having to work for money or depend on somebody else for it.

Working for money is the last thing a truly rich person will think. Working for money is what makes poor people.

They let their money or their businesses do the work for them, so they can have the time to do the things they are passionate about.

If a person demonstrates being rich by flaunting expensive things such as a big nice house, a car, gadgets and other doodads (a.k.a. stuff that burns money away) but he/she is a self-employed, a small business owner or employed with high-salary, he/she is a perfect description of a middle class.

Rich people are those who work to build businesses or create assets that put money into the pocket. They don't work to have food on the table or pay the bills. They create businesses so that these business will be the one to take care of them.

They are excellent managers of money.

They don't waste their money on liabilities (take out money from the pocket) or unnecessary expenses.

Instead, they are practitioners of "delaying gratification" to create multiple sources of income.

This is why the rich do get richer. Their habits and mindsets of being good money managers and creating businesses are what makes rich persons, truly rich.

Do you think you have what it takes to become one?
Jervis is a volunteer facilitator and business coach for Create Abundance 2020 community for its free Wealth Courses and Cashflow events. 

We would love to see every Filipino take the opportunity in learning financial education as a means to impacting change in our society especially in the aspects of financial freedom and the struggle to fight poverty. 

Click the links for Wealth Course and Cashflow reservations.

Friday, February 12, 2010

What is Middle Class?

Yesterday, I promised to tackle the reasons why the rich get richer, in contrast to the previous post - Why the Poor are Poor.

I'll delay that point for tomorrow's post. Today, allow me to give light to another category of people in the world of finance, the Middle Class.

To many, the Middle Class are neither rich nor poor. But for me, I consider them as still Poor for one simple reason. They are very vulnerable to becoming poor, simply by not doing anything. Becoming rich for them is difficult because they only know employment or self-employment.

A middle class is typically a person who has a high-paying job (example: a 6-digit salaried employees). Those who are self-employed / small business owner falls in this category.

Similar with the poor, they live a life of struggle. Their struggle is not because their income is not enough. As I said, they are high-income employees (the keyword there is 'employee') whose source of income is usually measured based on time spend in his or her job, or the amount of product or service he or she can deliver in exchange to their effort and time as a small business owner.

Maybe you're wondering why they are struggling despite their high-income.

The struggle comes from two primary sources:
  1. The manner of earning it 
  2. The habit of spending it.
As stated, middle classes earn their income through employment which require them to spend at least 5, 10 years or more, to get to a high-paying position, such as supervisor or manager or director or whatever.

When they get promoted, their income increases in proportion to number of rank and file employees they handle (this contributes to their headaches and stresses). Still, they are waged according to the time spend in the company.  In short, their income is directly proportional to the time they spent in their job. The corporate ladder is their life, where oftentimes office politics is the name of the game. They spend their time at work, working for somebody else's business, competing with their colleagues to get promoted. After several years, they realize they been working all their life that they've gotten old already, missed a lot of time away from the ones that are dearest to them.

The habit of spending their 6-digit salary often get themselves further to deep financial trouble. During paydays, middle classes spend their income with "stuff" they mistakenly refer to as assets or investments. They allow themselves to get strained with credit cards - a two edge sword - because they can't control their buying habits. They buy fancy gadgets, such as sophisticated cameras, cellphones, cars and sometimes a house - "stuff" that they think will make them look rich and not poor. These doodads drains money out from their pocket in a form of mounting credit card bills, loans and mortgages. When they do, they go back to their jobs and work themselves off (even if they vomit at the sight of their job) until they get burned, stressed out, and sick.

Thursday, February 11, 2010

Why The Poor are Poor?

Note: Welcome to 22 Blogs to Freedom series I will do for the next 22 days. It will end on March 5, 2010. Jervis ^.^v

Have you ever wondered why there are people who are rich while you’re not?


Have you ever ask yourself why is it that you are poor?

The answer lies on the pattern of behaviour between these two. In short, they have different mindsets that are worlds apart!

Let me highlight a couple of things to prove my point.

Poor people are poor because of a lot of things. They see things only as they are. They don’t go outside of their confine boxes. They don’t take action. They love to procrastinate and do other things, things that make them poorer everyday.


A poor person will remain poor if he continues to believe that working for employment is the way to financial success.

The only reason they know why they are working is to have a salary in exchange for their ‘time’ and ‘service’. To have a salary means to have something to pay for their expenses. They are working to have money to pay for the food they eat, the clothes they wear, the utilities, etc.
They see things only as they are. They don’t go outside of their confine boxes. They don’t take action. They love to procrastinate and do other things, things that make them poorer everyday.
Since the time they spend to work for a job is limited, the salary is also limited. If a poor person tries to extend this limitation (i.e. overtime work, working on a saturday or a sunday) they get stressed out, physically, mentally and sometimes spiritually.

They lose time with their family. They become robots.

They get sick, too. When they do, they will face a mountain of medical expenses which the company they’re employed wouldn’t pay 100%.

At the end of the day, they remain poor because their salary is limited in accordance to the amount of what they can do in a day.

Why the poor are poor is because their mindset are positioned in a way that they don’t even know or realize that they are being limited.

The secret of the Rich I will discuss tomorrow, so watch out!
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