Almost everyone is planning to be rich someday. Yet there are only VERY few that manage to become millionaires before the age of 30 despite a LOT of people on that age bracket got high paying jobs and income. Where the problem does lies? The root cause is identifying “needs” and “wants” in life. IT HAS NOTHING TO DO WITH HOW MUCH YOU EARN. One of the biggest misconceptions of being rich is associating wealth with material things, the physical things that you want your neighbours, friends and relatives could see in your home. In fact these material things are your BIGGEST ENEMY on your way to richness.
It is true that the truly rich are buying assets while the rest are buying liabilities. “Assets” are type of things you can possess that can produce income ON THEIR OWN without further and steady manipulation. Meanwhile “liabilities” are type of things that just cost you money if you owned it. It does not produce income DIRECTLY by itself. Identifying what are assets and liabilities helps everyone decide what SHOULD BE their needs and wants in their path to richness. Since assets can produce money on their own without further exerting effort, these things should be put on your NEEDS list. Below are great examples of assets that any person with reasonable income could acquire:
a.) Stocks – if you invest money in stocks, provided you research intelligently and have done a wise purchase, this will grow in value. For example, your 20,000 dollars’ worth of stocks today could worth 100,000 dollars in 3 years. You can buy stocks with the help of the broker. You can even buy stocks online. Educate yourself in stock trading and money management. Stay away from stock schemes and fraud, always double check with the government agencies if the broker or financial institution is legitimate and does not have bad records.
b.) Bonds –while stocks are riskier, bonds are actually safe. Bonds pay much better than most interest provided by the banks.
c.) Real estate- this is a popular form of business where you are selling a piece of land, houses for a profit.
d.) Websites – not all websites are assets, some are actually liabilities. But if you own a website that produces a steady income without much further manipulation, then that website is an asset for you.
e.) Royalties from patents and copyrights – if you are buying the rights of popular songs or inventions that are already producing substantial amount of royalties; then those songs are your great assets.
f.) Your money in the bank – though it depends how much interest you will earn, this is better than nothing.
g. Any form of business that is already stable and producing income- some businesses are for sale without being too expensive yet they are income generators. For example, you might read some advertisements for bakery for sale or internet café.
So while you are provided with great examples of asset that should be in your “needs” list. What are these wants or liabilities? These are the things that you have possessed yet they are not directly income generators. It is highly recommended to put a strong cost control over these things and LIMIT them. For example:
a.) Cars – while cars help you reach your destination faster, it is a form of liability. Much more if you start accumulating cars.
b.) Gadgets – while they might help you in your job, it’s much better to stick what are strongly needed. Some people have a lot of gadgets that become redundant in their lives. For example what is the use of having 3 laptops and then you still “need” to buy one iPhone, iPod and everything else? You can live even just a single gadget and that is a single computer.
c.) Dress – ideally any humans require at most 10 set of dress; one for each day and other on wash days. There are only 7 days a week. Some are ashamed of wearing the same dress over and over again; yet does not feel ashamed to borrow money when pockets become empty because of too much dresses in their cabinet.
And these lists will never end, there are so many liabilities in this world and one of the main reasons a lot of people are not rich because they are so crazy and so busy accumulating these liabilities. If you are planning to be rich, your needs should be those income generating assets and your wants are the liabilities. Never stop accumulating assets but put a tight control on your wants and liabilities.