Before becoming rich u must understand the terminology of the rich, like the ABC of language.
How much money do you need to survive? 1? 100? 1000? 1million? 1billion? 1 trillion?
If we don't know the basic we will say as much as we can land our hand on. We become a typical miser and our life will be misery as all miser life a misery life.
For some others, why to bother, lets it take care of itself. You will be an avoidance of the current topic. How many of us wanna talk about our finance, but finance is the heart of what we need. Money cannot buy everything (eg. love and health) but everything needs money.
So, what terminology we need to know to be rich:
1) Expenditure
2) Income
3) Active income
4) Passive income
5) financial security
6) financial freedom
7) financial wealth.
I will not dwell more on the terminology, you can always google up or see youtube for it.
But, I will put it in equations or how the mechanics of it working.
First, you are financially secure when your active income and passive income > expenditure. Remember the agony of balancing your credit card, checkbook, and tax each year. You are financially secure only if you continue working. Once, you stop working your security is gone. Most people are practical bankrupt if they don't receive their next paycheck.
Second, you have financial freedom. This means your passive income (money that you don't have to work for or basically money working for you) is more than your expenditure. Here, money is your slave but as long as you live within your means. You are free of the rat race. You don't need to continue working or to be employed. This means works become leisure and not a necessity anymore. But, you cannot live the life of the rich yet.
We then come to financial freedom, whereby your passive income is 10x more than your expenditure. This time you are really rich and you have many lee-way to spend more.
So, to be rich we must accumulate as much passive income as we can. In the first ten years, we work for money, in the next ten years, the money will work for you. I will prove to you in the next topic entitle passive income and the agony of debt.
"Money is not the root of all evil for me but debt is the root of all evil."
Good Luck! Amigo!
Sincerely,
Dr Lion
How much money do you need to survive? 1? 100? 1000? 1million? 1billion? 1 trillion?
If we don't know the basic we will say as much as we can land our hand on. We become a typical miser and our life will be misery as all miser life a misery life.
For some others, why to bother, lets it take care of itself. You will be an avoidance of the current topic. How many of us wanna talk about our finance, but finance is the heart of what we need. Money cannot buy everything (eg. love and health) but everything needs money.
So, what terminology we need to know to be rich:
1) Expenditure
2) Income
3) Active income
4) Passive income
5) financial security
6) financial freedom
7) financial wealth.
I will not dwell more on the terminology, you can always google up or see youtube for it.
But, I will put it in equations or how the mechanics of it working.
First, you are financially secure when your active income and passive income > expenditure. Remember the agony of balancing your credit card, checkbook, and tax each year. You are financially secure only if you continue working. Once, you stop working your security is gone. Most people are practical bankrupt if they don't receive their next paycheck.
Second, you have financial freedom. This means your passive income (money that you don't have to work for or basically money working for you) is more than your expenditure. Here, money is your slave but as long as you live within your means. You are free of the rat race. You don't need to continue working or to be employed. This means works become leisure and not a necessity anymore. But, you cannot live the life of the rich yet.
We then come to financial freedom, whereby your passive income is 10x more than your expenditure. This time you are really rich and you have many lee-way to spend more.
So, to be rich we must accumulate as much passive income as we can. In the first ten years, we work for money, in the next ten years, the money will work for you. I will prove to you in the next topic entitle passive income and the agony of debt.
"Money is not the root of all evil for me but debt is the root of all evil."
Good Luck! Amigo!
Sincerely,
Dr Lion
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