How Does The Rich Remain Wealthy?
Inheriting the old, building the new
Who envies guys with rich Dads?
Please show me some hands (I am raising mine, too).
I have a friend who was married and has one kid. Based on what they inherited, they only need to work if they convert those real estate properties into money-making assets.
But that friend of mine chose to live a normal life and let his talents be used by serving as a doctor in our country.
Old money is retained because a system is in place to preserve the wealth.
Unless people through the generations are reckless and into mindless spending, that is another story.
Not everybody is blessed with inheritance, but if you plan to create your empire, then this is what I have learned from others to carry on the wealth built on or intended to pass on.
Learn from the military.
People who are from the military are tailored to the unique demands of protecting the country.
Still, ordinary citizens like us can adopt several practices from them to manage our money.
I would call my wife every time cash flows in my bank account; I would show her the spreadsheet I manage so that she knows where what comes in and what comes out.
We would discuss recalling the nature of credit card swipes or online payments I had or she had done.
We also forecast future spending outside that budget tracker, such as birthday gifts to this and that. Our family outings are limited to a certain amount.
And as much as possible, it is better to eat first at home rather than spend it on a drive-thru via McDonald’s.
Similar to how military units operate within allocated budgets, you can create and stick to a monthly budget to manage your finances effectively.
Allocate funds for standard expenses, savings, and discretionary spending.
Exercise restraint and control when it comes to spending money.
Avoid impulse purchases, seek value for your money, and practice delayed gratification by saving up for major purchases rather than relying heavily on credit.
The Oprah Winfrey approach
If you don’t have an inheritance, that is fine. You can build it from scratch.
Most of us are employees. But it is not the end of the world; there is hope.
Building wealth as an employee is challenging due to limited income potential (fixed income), lack of control over earnings, time constraints, inflation, and, worst, taxation (I cannot feel the government benefits, that’s for sure).
Having multiple sources of income can enhance the wealth-building potential for 9–5 guys like you and me.
Diversifying income streams through side hustles, investments, or passive income can mitigate the risks of relying solely on earned income from employment.
An excellent example of having multiple sources of income is Oprah Winfrey.
Oprah’s TV career is legendary. “The Oprah Winfrey Show” ran for a whopping 25 years. She has been behind many TV shows, movies, and documentaries, making bank from ads and deals.
She was not just a TV star but a best-selling author, too. Oprah’s penned a few books and teamed up on plenty more, raking in royalties.
You’ve seen her in films and TV shows, earning dough from acting gigs and endorsements.
And here’s the kicker — Oprah’s a savvy investor.
She’s put her money into businesses like Weight Watchers and scored dividends, not to mention the potential for serious cash when those investments pay off.
As a co-owner, she’s also cashing in on ads, subscriptions, and licensing deals. Oprah also partnered with brands from cosmetics to cars.
Smart Oprah, she is just amazing.
Making Debt Your Friend
Investing in real estate is capital-intensive.
I also had several articles about purchasing rental properties in the central business district.
My wife and I are fond of real estate investing, and there is no way for us to pay huge cash on it, but it is a good thing we can leverage on a friend, called debt.
Debt can be your friend because it bridges the gap between cash gaps now and your future money later that you have.
If the money you make from your debt results in incremental cash in your pocket, you win.
What do I mean?
After equity payments, rental payments over amortization payments to the bank are reasonable.
If it is the other way around, there must be something wrong (unless you have a game plan to change your monthly cash flows into favorable).
Key takeaways
Building wealth should be a fun journey with exciting opportunities to learn, grow, and achieve financial freedom.
It doesn’t have to be a depressing walk like I experienced.
It’s about embracing challenges, celebrating successes, and enjoying the process of creating a secure and prosperous future with your loved ones.
Do not make it a burden; if it does, there must be something wrong with how you view wealth — change your mindset and heart.
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