Numerous surveys have come to the conclusion that the top wealthiest 1% of the world have greater combined wealth than the bottom 99%. A fairly recent survey by Forbes revealed that America’s wealthiest 400 had more combined wealth than the bottom 150 million. This is the reality of the world today.
The chasm between the rich and the rest of the population continues to expand apace. For a long time, there existed a class between the truly wealthy and the poor, the middle class. In recent times, though, revealing data continues to show a rapid collapse of the middle class. Speculations are rife that there would soon be no comfort zone, no middle class where generations to come can feel comfortable without being truly rich, and that’s worrisome.
When that collapse finally occurs, many will want to be in the top bracket – the rich – but many will find themselves in the only other option – the poor. But you can break into the top bracket, like many before you. To do that, it is imperative that you learn from some of the world’s richest persons; lessons from some of their most revealing statements are what this article discusses.
1. The middle class worry about savings; the rich put their money to work
Living a comfortable life as a middle class earner is usually hinged on an ability to save as much as possible. Every penny earned is either used to clear up the bills or it is saved. While this is a good strategy, it is not a great one. Rather than put their money to rest, the rich put their money to work through investments. In their bid to increase their earning ability, they look out for avenues to earn more with the money they’ve acquired. Their willingness to risk the wealth of their “future self” sets them apart for financial success.
2. The middle class first pay their bills; the rich pay themselves first
When should investments come? For the middle class, this is after all bills have been paid and all necessary expenses have been made following payday. For the rich, a certain amount of their income is first dedicated to paying themselves through investments. They do this by allocating a certain percentage of their paycheck first to investments before anything else. When a big investment opportunity arises, they do not worry about taking the plunge with their earnings first; and if any investments fail, they simply seek out other opportunities.
3. The middle class live above their means; the rich live below theirs
The middle class set a target for living a comfortable life. For them to achieve this, they invest in big homes, flashy cars, and expensive acquisitions. These expenses swallow all of their income and keep them working from hand to mouth. The rich avoid this pitfall by living well below their means. Even as they continue to earn big, they remain in modest homes, maintain less glamorous cars, and acquire less expensive stuff. Rather than all that, they focus on expanding their wealth through credible investments.
4. The middle class live comfortable lives; the rich love being uncomfortable
Closely related to the point above is the desire of the rich to “be comfortable being uncomfortable.” The middle class feel comfortable working a “safe” job, which normally involves working for someone else and receiving a good pay. A more risky idea would be to move out of your comfort zone and begin working for yourself. The rich embrace the risk involved in starting their own business and go on to create wealth for themselves. Being uncomfortable forces you to be creative about moving forward.
5. The middle class work to earn; the rich work to know
The middle class enjoy the comfort of being a salary earner. It is the drive behind their work ethic, and fuels them to keep working even when they are down. When they get a raise, they improve their standard of living and improve their social status. To keep this going, they seek out jobs with higher pay and opportunities for promotion with higher pay. The wealthy, on the other hand, focus on the knowledge they can acquire from the jobs they work. How does the organization run? What keeps them going? What can be improved? How can this skill help me in my future endeavors? Such knowledge is useful for when they take flight on their own.
6. The middle class handle money with emotions; the rich handle money with logic
Those in the middle class are usually guided by their fear of losing their source of income. As a result, they take fewer risks with their earnings so as not to throw it all away. And should they take the plunge into the stock market, at the first sign of a dip, they count their losses and scurry away. When they observe that the market is gaining, they throw all of their savings into it. The wealthy are guided by logic. They know to wait if the market is gaining so much – for it will surely come down, and they know to also wait when the market dips with their investment – because that phase will eventually pass.
7. The middle class befriend everyone; the rich choose carefully
It is said that your income will end up being the average income of your four closest friends. This means that, if you want to be successful, you must find those who are truly successful and associate with them. Sticking around fellow middle earners or even lower earners will place you on the same mindset as them and do your chances of climbing up no good.
8. The middle class see obstacles; the rich see opportunities
There are over a thousand reasons never to make a particular investment. These are what those in the middle class see and turn away. They are always pessimistic of financial risks. The rich are mostly optimistic. They see financial risks as grand opportunities for further growth.