Part 1 is located here.
Now, consider this:
You earn a salary of $10,000 per month and your expenses amount to $9,900 per month. You live an extravagant lifestyle, accompanying yourself with a the latest gadgets and machines, expensive cars, and etc.
Your friend earns a salary of $2,000 per month and his expenses amount to $1,500 per month. He lives a modest lifestyle.
Assume also that other things remain constant (ceteris paribus).
Now, the big question. Who’s better off?
If your answer is you are better off, I beg to differ.
Think about it, at the end of the day, you are left with only $100 in your pocket while your friend is left with $500.
What matters is not how much you actually earn but how much there is left at the end of the day to be set aside, to be invested, and to be used to grow your asset base. The salary criteria alone is not a huge factor to determine whether you are well off or not. It’s how you manage that money to your advantage.
Robert Kiyosaki’s Cashflow 101 board game illustrates this point pretty well. It doesn’t mean that if you’re a high-flying lawyer (not targeting any lawyers here 😛 ) earning big bucks, then you are way richer than the truck driver earning a modest salary. All that matters is how you manage your expenditures’ list, folks.
Unless of course, if you measure wealth by who’s got the latest mobile phones, designer clothes, biggest cars, then, it’s different. Though, I don’t think that these are good indicators of a person being well off or not.
Alright, till next time folks!
Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.
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– Back to Basics: Asset, Liability, Equity
– Why Everyone Should be Wealthy
– Why Not Everyone Can be Wealthy
– Passive Income Exceeding Expenses
– Journey Towards Financial Freedom: Food for Thought
– What is more important to you? Money or Family & Friends?