Ordinary Income Can Produce Extraordinary Wealth With Proper Money Management
We've all heard stories of ordinary people with mediocre jobs who spend their entire life living simple fulfilled lives and when they die, they leave millions to their heirs. It seems unbelievable that an ordinary person making $30k a year could ever become a millionaire. It seems incredible because most of us earn and spend far more than that and still can't get by, let alone save millions for retirement. Financial success can be achieved on virtually any income if your spending is also properly managed.
All too often we can't wait to get a promotion because it means we can now upgradeGB0-180 to that new car or buy that boat that we have always wanted. Even without making special purchases monthly expenses always seem to rise so fast that we can never get ahead. If you feel this way, you are not alone. The majority of the population is walking the same Hedonic treadmill that says we perpetually need more in order to be happy.
So what do we do? We continually add more debt burdens to our family and lives all in the pursuit of happiness but never find ourselves satiated. We then go back to our home, sit down, and ponder on how good life would be and how easy it would be to save for the future if we just had another revenue stream. We don't sit around thinking about how good life would be if just had one fewer car; but ironically, for the average wage earner, wealth and happiness are best achieved by reducing expenses rather than increasing wages.
Your wealth potential can best be calculated by determining your income and then subtracting out your mandatory expenses. Simply put, if you make $5000 per month but your mandatory expenses are $4000 per month, you have a maximum wealth building potential of $1000 per month. If you fill that $1000 per month with additional discretionary purchases, your wealth building potential declines exponentially.
If you want to build more long term wealth, the only money that you will be able to build it with is the money left over after all your expenses have been paid. You can improve that number by either cutting out discretionary expenses or by restructuring mandatory expenses. If you have $1000 left for discretionary expenses at the end of each month, but somehow manage to spend every penny by the end of the month, then you should probably transfer $500 at the beginning of the month to a non-accessible account. Odds are that you will magically only spend $500 that month in discretionary spending simply because we adapt to our environment and if our environment only has $500 in it, we will adapt.
If GB0-280you want to save more than discretionary cuts can afford, then it may be time to address the mandatory expenses. We forget how easily discretionary expenses can become mandatory. While satellite TV is viewed as a discretionary expense, it is in truth a mandatory expense because you are likely obligated to a 2 year agreement and you probably want your TV. Your home is also a mandatory expense. These two mandatory expenses have one major thing in common in that you probably purchased more than you needed to be happy, but once you make that decision you are locked in! Unraveling mandatory expenses is much more time consuming and difficult relative to unraveling your discretionary expenses, but the good news is that when you make changes to your mandatory expenses, it can have a dramatic effect on your savings (if done properly). The key is that every time you unravel a mandatory expense, the amount saved must be funneled into a savings or investment account before it can be picked up by the "discretionary spendmonger". If you have $500 per month being sent to an investment account, then the same day that you save $20 on a new satellite TV agreement is the same day that you change your automatic savingsGB0-320 draft from $500 per month to $520 per month.
As you reduce your discretionary and mandatory expenses each month, your wealth generating potential will increase. This means that you can become a millionaire on any income, but you have to make the decision to get off the Hedonic treadmill and you have to make your saving automated.
All too often we can't wait to get a promotion because it means we can now upgradeGB0-180 to that new car or buy that boat that we have always wanted. Even without making special purchases monthly expenses always seem to rise so fast that we can never get ahead. If you feel this way, you are not alone. The majority of the population is walking the same Hedonic treadmill that says we perpetually need more in order to be happy.
So what do we do? We continually add more debt burdens to our family and lives all in the pursuit of happiness but never find ourselves satiated. We then go back to our home, sit down, and ponder on how good life would be and how easy it would be to save for the future if we just had another revenue stream. We don't sit around thinking about how good life would be if just had one fewer car; but ironically, for the average wage earner, wealth and happiness are best achieved by reducing expenses rather than increasing wages.
Your wealth potential can best be calculated by determining your income and then subtracting out your mandatory expenses. Simply put, if you make $5000 per month but your mandatory expenses are $4000 per month, you have a maximum wealth building potential of $1000 per month. If you fill that $1000 per month with additional discretionary purchases, your wealth building potential declines exponentially.
If you want to build more long term wealth, the only money that you will be able to build it with is the money left over after all your expenses have been paid. You can improve that number by either cutting out discretionary expenses or by restructuring mandatory expenses. If you have $1000 left for discretionary expenses at the end of each month, but somehow manage to spend every penny by the end of the month, then you should probably transfer $500 at the beginning of the month to a non-accessible account. Odds are that you will magically only spend $500 that month in discretionary spending simply because we adapt to our environment and if our environment only has $500 in it, we will adapt.
If GB0-280you want to save more than discretionary cuts can afford, then it may be time to address the mandatory expenses. We forget how easily discretionary expenses can become mandatory. While satellite TV is viewed as a discretionary expense, it is in truth a mandatory expense because you are likely obligated to a 2 year agreement and you probably want your TV. Your home is also a mandatory expense. These two mandatory expenses have one major thing in common in that you probably purchased more than you needed to be happy, but once you make that decision you are locked in! Unraveling mandatory expenses is much more time consuming and difficult relative to unraveling your discretionary expenses, but the good news is that when you make changes to your mandatory expenses, it can have a dramatic effect on your savings (if done properly). The key is that every time you unravel a mandatory expense, the amount saved must be funneled into a savings or investment account before it can be picked up by the "discretionary spendmonger". If you have $500 per month being sent to an investment account, then the same day that you save $20 on a new satellite TV agreement is the same day that you change your automatic savingsGB0-320 draft from $500 per month to $520 per month.
As you reduce your discretionary and mandatory expenses each month, your wealth generating potential will increase. This means that you can become a millionaire on any income, but you have to make the decision to get off the Hedonic treadmill and you have to make your saving automated.
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