Difference between income and wealth

Difference between income and wealth

Difference between income and wealth

Having a large income doesn't necessarily mean you are wealthy, doctors, lawyers, professionals working with large corporate, earn thousands of dollars year but still can't afford to dine at a premium hotel / restaurant, because they don't have that extra money to do so. Why? Because they make a decent income, but don't understand the financial strategy the wealthy people use. They buy cars and houses which are too expensive and are beyond their means, their kids study at expensive schools where they have to depend on one pay cheque to the next. Their life is busy, keeping up and meeting expenses of their day to day life. They do have income but they don't have the wealth.

Buy living pay cheque to pay cheque life it is not the amount that matters, but the life style you lead matters. It's not about how much you make, it's what you do with it that counts. If you are not wealthy and still use credit to buy depreciating assets like electronics, cars or anything that goes down in value, you are dragging yourself into a hole where it is difficult to climb out. Most people themselves programmed to buy depreciating assets, everywhere you go to find advertising messages urging you to buy the things that will go down in value. It hardly matters if you do not have the money to buy, as the sellers are happy to extend the credit or except your credit card. You are left with debt and pile of useless goods, which don't sell for a penny, you spent getting them. On the other hand consider this, if you use debit to buy things that increase in value and generates profits, you have started to think and act like a wealthy person. The thumb rule wealthy people use is to spend more on assets where value increases like the real estate. The moment you start this, you would set yourself apart from people having just an income. This is where you will enjoy buying depreciating assets because you know you can afford them. Wealth is living within your means, when most of your income is coming passive sources where you don't have to work for it.

Wealth secret: Use credit (borrowed money) to invest in things that go up in value and will generate positive cash flow so you can service your debits and increase your net worth.

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