Wealthy people are those who are rich but don't rely on a single source of income. They have assets that generate steady income streams. When one source dries up there are still other sources of income available to them. They make money to create sustainable living conditions. They know the meaning of 'delayed gratification'.
Becoming rich can happen overnight but becoming wealthy takes time. Wealthy people know how to make money but rich people only have money. If you are Wealthy only then you can call yourself financially free. To be financially free it is not enough if your are only rich. You have to be wealthy too. It is necessary to know the differences between being rich and being wealthy. Being rich is basically how much you earn. Being wealthy is how you manage your money. You may be earning a lot but what you are doing with your income is more important. You become wealthy over a period of time. Managing you income in a prudent manner by investing in income generating assets is what will make you not only just rich but also wealthy. If your entire income is going towards purchases, credit card payments and loan installments then you are not on the right road to become wealthy.
For becoming wealthy you will have to follow the traits the wealthy follow. They are:
- Live below your means.
- Budget your spending.
- Save on taxes.
- Have a planned, disciplined approach to investing money.
The wealthy always focus on building wealth and buying income generating assets. They buy a car for renting out, not for their use. This is an example of an income generating asset. The rich are more interested in consumption and spending on luxury. They will buy a car for their use, where the value of the asset immediately begins to fall. The same asset - car - which is an income stream for the wealthy is an expenditure stream for the rich. They have to pay from their income for its maintenance, insurance and depreciation. Millionaires focus on building wealth, not consuming goods. They are also frugal, a quality that the rich don't possess.
The rich buy jewellery which is a depreciating asset. The value of jewellery generally falls when you resell it; you are dependent on the jeweller's opinion as to the purity of the gold or the salability of the design. Whereas you will find that the wealthy buy a gold bar, the price you sell it for will solely depend on the current price of gold and not on a jeweller's discretion. A gold bar is an appreciating asset when the gold prices rise.
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