11 Things The Poor Don’t Know About Obtaining Money.
Proletarians have nothing to lose but their chains
“If poor people knew how rich people are there would be riots on the streets — Chris Rock”
One of the fascinating theories relating to the economy is by Karl Mark. I adore how naturally he explained such a sensitive and complex topic.
A few years ago, I might have found his ideas too rebellious for my taste. I thought that he is promoting unfair quality, and he is challenging hard work and destroying competitiveness. I don’t stand by all of his beliefs, but we can’t deny the highly uneven income gap between the classes.
Hence, I want to point my finger at some of the financial illiteracy issues at the bottom of the income pyramid but for that, I expect you to broaden your vision and keep the sentiments aside. PS: I acknowledge that exceptions are always there.
1. They believe money grows linearly because you need to do more to make more.
First of all, we need to agree that hard work and intelligent work are two different games. I firmly believe that the low-income groups have physically challenging, tiring, and laborious jobs, yet they manage to remain in the bottom percentage for a lifetime. So clearly, there is something wrong with their value system and approach to life. So it’s elementary to conclude that they are bad at multiplying and retaining money.
The rich are very well aware that money grows exponentially because of leverage and hard work is not directly proportional to income but smart work is.
2. Instant gratification and treating yourself are wrong.
When one lacks means and no long-term plan or saving goal, people start to live in the present instead of thinking about the future. Whereas on the other hand, the wiser ones are busy planning for tomorrow, and here you are indulging in petty pleasures or regalements.
There is no need to celebrate that “ special birthday.” There is nothing, especially when doing so on credit money. I don’t stand against the idea of taking care of yourself and loving one’s body, but that pedicure, shopping haul, or visit to the bar isn’t going to make you feel any better about yourself. You are simply abusing your money and butchering that credit score.
( $1000 may not seem a lot of money today, but if a person had invested a $1,000 into ASOS in 2001, it would have become $300,000 in 2021) Now you understand the bigger picture?
Ignorance is no bliss. You need to be prompt and avoid falling into those 5 seconds of pleasure that lead to days and years of misery. You cannot buy pleasure, comfort, peace, or happiness on loan money. Such indulges are going to nothing but discomfort and regret.
3. Ideas are useless without execution.
All of us had thought about that million-dollar revolutionary idea that might change our lives, if not the world. We often find ourselves brainstorming after every episode of shark tank, and some of us might even believe that a few of those pitches are too basic, or some might have stolen your idea, but guess what? We can not protect thoughts and ideas under patent and Copywrite laws.
Please stop with that ‘‘ I have a million-dollar idea’’ because an idea is only worth a million dollars if it makes that million mark. Everybody got ideas; walk down the street, and every second person will vomit a few business models, which are worth a fortune in their eyes.
Your idea is a multiplier of your execution.
If you got an amazing idea that’s meriting a 10,000 X multiplier, but your execution is 0. Perform the math:
0 x 10,000 = 0
Starbucks is still winning the coffee game year after year. Making coffee and cookies is not a 90 Billion dollar idea; it is the execution and dedication that distinguishes them from their competitors. Hence you can have a very elementary concept, but by a genius execution, you can nail it.
4. Don’t bring, take or indulge in responsibilities if you can’t.
Warning: This might rub you the wrong way, but my intentions are innocent.
I understand how much pets mean to some people, but one can’t turn a blind eye because they can be expensive. Their food, healthcare, toys, treats, and grooming add up pretty quickly, and god forbid they encounter any health issues. Similarly, one must not entertain the thought of even bringing children into financially unstable homes; having kids is not only life-changing, but it alters the entire fabric of your existence. It’s super expensive to bear children into the world, and once they are here, they’ll consume your time, energy, and resources.
So it is far better to have kids during a financially sound time rather than highly rocky years. This will make both you and your kid’s lives a bit more secure. Figure out your bank before taking major responsibilities in life and don’t chain yourself into accountabilities before you are ready.
5. Don’t take life as it comes, be prepared.
Set up your emergency funds early in life and put away $1 every day; it’s vital to have some liquid money at your disposal during the hard times and have a slight edge over things. It’s fun to be spontaneous, but I can’t say if it’s wise to be so.
Surely life is unpredictable and one cannot foresee every challenge it throws our way, but you can always take caution and try to be prepared for the worse.
6. Giving to the next generation is essential.
Question. How does wealth travel?
Answer. It travels by blood, lineage, family, and friends. Those rich kids are rich because they receive wealth diagonally, vertically, and horizontally. Even before they are born, their financial faith is sealed by trust funds. The secret to old money is passing down resources and wisdom.
You and I might not have a ton to give, but a little bit is better than nothing (little goes a long way). Try your best to ensure your coming generations’ destiny by passing down insight and life lessons. Enlighten your kids with experiences and give them the valuable gift of wisdom.
7. Talk about money, exchange financial knowledge, know the laws, read the news, and take your education seriously.
In many civil societies, it’s taboo to talk about finances in highly conservative and patrilineage cultures; the women and children have no financial literacy, and they don’t know about their own monetary conditions.
Neither the kids are taught about money at school nor at home. Often money becomes this hush-hush and under the rug topic; even friends of the same age group forbid themselves from fiscal talks. But in wealthy families, the conversation around money is welcomed at the dining table. Those groups talk extensively about stocks, real estate, or other major and minor aspects of growing assets.
Another drawback is a lack of awareness or knowledge around government schemes and positive laws. This is why people not only stay unbenefited but also fall into the trap of Ponzi schemes due to a lack of better knowledge and fair judgment. (Be an aware citizen and harness those free benefits, resources, schemes, and tax write-offs. It’s free money on the table.)
8. Break from the vicious cycle of extreme poverty.
The gap between the rich and the poor is indeed getting wider. The rich are getting richer, and the poor are getting poorer.
You need to free yourself from systematic poverty and unchain yourself from the clutches of scarcity. You may do it in many ways, such as educating yourself and getting high-paying jobs, acquiring skills and expertise, starting a micro-business, finding yourself a mentor, or marrying rich.
9. You need at least 2 Income Streams to feel protected.
Don’t think of 2 or more income streams as overtime, freelancing, getting another weekend job altogether, etc. The only streams of income are not jobs. To guard yourself against the market's shaky fluctuations, you need to diversify your income streams and not depend on one source of revenue.
Some Sources of income are —
- Salaries
- Dividends
- Interest on fixed deposits
- Rental income from properties
- Dividends from other companies that you have invested in are profitable.
- The growth of stock and index fund portfolios and more.
It is very important to do so because if one of these ventures fails you have some backup plan to cover up those damages and stay afloat. Diversify your portfolio now.
10.Pretending to be more than what you are. The first step towards accomplishment is acceptance.
When millionaires or billionaires are losing money, they acknowledge it; in fact, it’s the first-page news. They take vital steps, analyze the losses and talk around the table to pick up minds and eventually get on track. But the less fortunate ones hide the truth about their financial situation from kids, spouses, partners, and sometimes even themselves.
One needs to stop living that bogus lifestyle and start being true to your bank balance and medians.
Hiding those pilling bills is not going to go any good to you. You need to face the situation heads on and accept the truth and then start the conversation and try to understand those bespoke patterns or faults.
11 . You can pay little to no money in tax if you start a business.
Although this debate has been around for decades, the tax system is flawed, which clearly benefits the rich. Hence this is common knowledge that businesses don't pay taxes on their gross income, but they pay taxes on what's left with them after all the expenses. This may sound highly biased and unfair to many, so you have two options now:
- Keep crying over the systematic problems.
- Harass, or as I may say, harvest these laws in your favor.
An average company pays within the 1%–5% tax bracket, whereas the average American spends around 27% on income tax, while in Europe, it can go as high as 50%.
The business individuals pay the taxes on money left, not on money made. They exploit the laws and spend a great deal on funding their lavish lifestyle on tax money. The more business expenses you have, the less money is left to be taxed. This is why people spend 5 to 6 figures on a private jet. Since it allows them to meet with clients, this becomes a business expense. Jet fuel, meals with clients in Michelin star restaurants are all deductible costs as they all come under business expenditure.
If you’re broke right now, here’s your to-do list:
1. Learn new skills that will quickly improve your market value.
2. Start to create a system that does not rely on you to earn capital, on the side.
3. Negotiate at places where you can. (PS: It's easy to bargain with cash.)
4. When new money starts coming in, don't switch to the side project full time keep your day job for as long as you can.
5. You must either save or reinvest everything in the business while living below your means.
6. When cash comes in, move it to alternative investments.
7. Put 30%–50% of your income towards savings or other investments. Let the money multiply.
Thank you.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
