Financial Education: Why & How Rich People Don't Save Money

We have all been told by our parents that the way to wealth is just to work hard and save as much as we possibly can.

It sounds witty to save money and whilst that may have been the BEST strategy back in our parents days, the world where that works is long gone.

The rich and affluent people you see in the world today do not save money. They didn’t save money to get rich. They are not saving money to stay rich.

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Things Worth Saving

Let's begin with the solution. 

It's not advisable to save something that loses value over time. Instead, it's better to save something that either maintains its value or increases over time.

Many currencies tend to lose their value gradually over time due to inflation, which leads to a decrease in your purchasing power.

Therefore, it's important to consider the fact that relying on a wealth strategy that involves holding onto something that gradually loses value may not be a wise decision.

LEARNING TO SAVE MONEY IS A GREAT WAY TO BUILD FINANCIAL DISCIPLINE BUT A POOR WAY TO BUILD WEALTH.

Instead of simply saving money (which is a form of currency), wealthy individuals pursue a different approach. They focus on creating and acquiring assets, and then retaining ownership of those assets.

An asset is something that increases in value over time and generates an income.

1. Bitcoin

Bitcoin is a unique financial instrument that doesn't fall into traditional categories such as assets, commodities, currencies, or stocks. 

While it can be utilised as any of those, it belongs to its own distinct classification. This is an essential aspect to comprehend about bitcoin.

What you do with bitcoin depends on how you see it and where you are (financially). 

Some use it mainly as a currency. Some use it as a commodity. Some trade it like stocks. Some leverage it like an asset. But it is all because of where they are and the tools they have access to.

To the everyday person, bitcoin is certainly something you can keep. You keep enough stash of it away that you know can help you start over if things fall apart.

It makes sense to save bitcoin up to a certain amount and keep it. The amount is up to you. But you must understand that it is not an asset. It doesn’t bring money into your pocket. There is no residual or passive income.

Rich people keep some money in bitcoin. But they did not get rich by buying bitcoin. Also, they are not staying rich by investing in bitcoin. Those who are getting richer with bitcoin are trading.

If you don’t understand trading, don’t dabble in it. You will get hurt. Don’t let anyone tell you that you can do it. If you are not trained and sophisticated enough to do it, stay away.

2. GOLD

Gold is also similar to bitcoin but they are not the same. 

Gold is a commodity. Gold will not give you residual income. 

While the price of bitcoin fluctuates heavily, the price of gold is relatively stable with gradual appreciation over TIME.

It is not really that gold is appreciating over time. In the real sense, the currencies are decreasing in value over time with reference to gold keeping its value.

Gold is a very famous option for rich people to store their wealth. 

But you must understand something here. 

The rich people who own gold did not buy gold to get rich. They bought gold after they became rich as a hedge or insurance policy.

So, you could say the rich save gold. But an everyday person buying gold like the rich may not be doing the same thing. It matters where you are financially. You have to do what is right for your level.

When purchasing gold, it's crucial to avoid buying paper representations. 

This may sound convenient, but it's an important consideration. 

Instead, opt for acquiring the actual physical metal of Gold and keep it at a suitable and safe location.

Refuse any offers for certificates claiming to represent your gold holdings stored elsewhere. 

If your intention is to trade gold as a commodity, you may choose to purchase paper representations. 

However, if your goal is to retain ownership of the gold for the long term, it is best to avoid buying paper alternatives of Gold.

When push comes to shove and people start scrambling for money, you will discover that the number of gold certificates given out does not match the number of gold bars available. It always happens. People are that greedy.

If it is not locked up somewhere safe., don’t think it is yours. Trade the paper, but keep the physical thing.

3. REAL ESTATE

Real estate does make people rich. 

The rich keep real estate. 

Real estate is a great asset class that not only makes people rich but also keeps people rich. 

However, you have to know how the game is played.

Buying a real estate property and living in it does not make it an asset. 

A true asset has to appreciate over time while also giving you residual income.

Bitcoin appreciates in cycles but doesn’t give you residual income. 

Gold appreciates over time but doesn’t give you residual income. 

Real estate also appreciates over a long period and when done right, it gives you residual income.

Residual income from real estate often comes in the form of rent paid to the owner. When all expenses are deducted from the rent and there is still a significant chunk left, then the real estate property is a true asset.

Having other people live on your property is not the only way to turn real estate into an asset.

Some turn their properties into storage spaces. It brings less drama and maintenance. But you have to learn how that game is played.

Some use their land to grow crops. 

Some use their land to raise animals. 

Some rent out their property to companies and corporations for entertainment purposes. 

There are all kinds of options.

So many people have become rich by playing the real estate game. In fact, it is said to be the easiest way to build wealth if you learn how to do it right.

Real estate does have its risks too. 

Prices can fall off a cliff in the short term. 

Renters can be problematic. 

The market is already too saturated in many cities.

But yes, anybody from any background can get into the real estate game and grow rich.

Here Is The Truth How Most People Got Rich in the First Place

Most people got rich in the first place through a successful business or having a high income career. 

They started a business or joined a business and it became successful or they were working in a very well paid industry and stacked their cash. 

That is often the first taste of wealth.

It is very important to understand this.

A lot of people are looking for a shortcut or a hack to wealth without starting off with any money or very little money.

It takes money to make money.

I always recommend to increase your active / main stream of income FIRST as this is the foundation that will build your wealth pyramid.

Give this a read: https://www.patreon.com/posts/69342851?utm_campaign=postshare_creator

Anybody who wants to jump into the super/rich class has the best chance by building a business or getting in a high paying career field. 

The barrier to entry for real estate can be high. And it takes years and decades to build serious wealth through real estate.

If you want to go faster, build your business. 

And this is not about “starting a business”. 

The majority of those who start businesses fail. Those who succeed are those who have made up their mind to build something no matter what it takes.

The easiest way to get started in building a business that will make you rich is to listen. 

Listen to the needs around you. Listen to what people want. And be the person to get it to them.

Building a business is not about coming up with a product. It is not about creating an online store or service website. Building a business is about building a customer base.

This is about finding people who trust you enough to buy from you (even when they can easily go elsewhere). If you have such people, it is a matter of looking for what they would love to buy and offering it to them.

For example, you don’t have an online business because you have a million views. 

You have an online business when people are willing to give you their name, email address and their bank details.

With your success in business or your high paying job, you can THEN divest into real estate, other businesses, gold, and bitcoin. 

This is the smart way to play. And it has worked for a lot of people.

Conclusion

The rich don’t save money. They own assets and keep their assets. They almost never sell their assets and mainly live on the residual (or passive) income.

The best way to get started is to build a successful business or get your foot into a high paying industry. That is when you are in the game.

I don't believe in cutting back expenses, I believe in making more money.

Think about these things.

- Till Next Time