Personal Finance

Personal Finance – Why Rich Are Getting Richer?

This topic has been quite popular in Quora and decided to write a blogpost about it. I always try to share everything I know about the money and personal finance and I think this is the one of the most important ones. By understanding the difference between poor, middle-class and rich you are able to develop a rich mindset and start your way towards financial freedom.

Poor

Poor people are buying stuff, a lot of it. If you are visiting in a house whose owner has so called “poor mindset”, you have probably found out that their apartment is filled up toys, gadgets, cups, mugs and etc. They are using all their money to buy this stuff. Also they spend their time in front of TV watching some stupid reality tv-show or buying stuff from TV-shops and most of the cases if you say something about their habits, they are not willing to even listen you they. Does this look familiar?

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Middle Class

Middle class is buying liabilities. Like cars, boats, paintings, big houses and they think that these are assets. Middle class is normally quite well educated and they are having a good job, but this is their only income source. So, they need to very long hours to cover all their expenses. In the end all of these liabilities are taking money out from your pockets, not putting it in.

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Rich

Rich are buying assets. These assets puts money to their pocket. Like stocks, bonds, real estate (which is rented) and etc. They always educate themselves a lot and most of the cases they read a lot. Also they follow the 4% rule (I will cover this 4% rule in my coming posts).

“In the real world, the smartest and the richest people are people who make mistakes and learn. In school, the smartest people don’t make mistakes.” – Robert Kiyosaki

Regards,

Matt

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