15 Reasons Why The Rich Are Getting Richer
In the past few years, the wealth gap debate has risen to be one of the hottest issues the world is facing, with many throwing out options relating to higher taxation or mass redistribution of wealth. In this piece, we'll take a look at how the rich are getting richer and what differences in approach they use versus the average person. But before we get started on this list, there are two things worth mentioning:
One, there needs to be a reward for working harder than everyone else; and two, rich people are not hoarding money; they actually have it spread out in other people's companies or investments. This is really important because unless we can reward those who perform well, there wouldn't be an incentive to do great things.
This is a very popular misconception; people think that rich folks have a room in their house filled with gold coins because that's what they saw in Scrooge McDuck cartoons. When in reality, the amount of money you hear is a valuation based on how much money you could possibly get if you were to sell everything of value today.
Okay, so with these two things out of the way, here are the 15 reasons why the rich are getting richer. Welcome to Alux, the place where future billionaires come to get inspired.
Starting off at number one: they think bigger than everyone else. This is one of the fundamental differences between the rich and the average. In order to be rich, you need to solve bigger problems. While the average person concerns themselves with issues related to themselves, the rich are figuring out ways to build companies that can serve millions of people. This think-big mentality is the foundation of wealth building. Truth be told, it takes almost the same amount of effort to build something small as it does to build something big. So if you're going to think about something anyway, you might as well think big.
Number two: they have money ready for opportunities. One of the reasons the rich keep getting richer is because they always have money lined up for opportunities. That's why the middle class and poorer class think of rich people as cheap; they're saving money. But here's the simple truth: let's say we've got two people. One has money saved ready to invest in opportunities, while the other doesn't. The same opportunity presents itself to both individuals. Because person A has the money to access it, their personal wealth will grow, while person B will remain the same. This is a fundamental reason why some people move ahead while others never move at all.
Number three: they have value-based long-term investments they don't touch. This is where things get interesting. Let's keep the comparison going, shall we? So say we've got the same two people. Each of them has $20,000. One person uses that 20 grand to put down a down payment on a house that's worth $100,000, which is to be rented out, while person B uses it to buy a new car and a new TV. Because of the rental income, the property is going to pay for itself. In 10 to 20 years down the line, that property is now worth $200,000 and has been paid for in full by the tenant. Meanwhile, the car has needed constant repairs, eating up more money, and is now unusable.
This is how the rich are getting richer. They use their money to buy assets that generate money, either directly or through appreciation. If you can buy enough of these assets, you could reach a point where your wealth has gathered enough momentum that it's constantly going up. Basically, the income your wealth generates is greater than what it would cost you to live the life you want.
Let's expand on this, because it's really valuable.
Number four: they only spend the interest, not the principal. There's a point in wealth building when a person becomes financially free. Financial Freedom is when the money coming in from assets is double that of your monthly expenses. As long as you don't dramatically increase your lifestyle, your wealth is constantly going up. You've got excess capital which you could reinvest, leading to more money coming in, and so on. Now, the catch is to never spend the principal or liquidate the asset in order to cover temporary expenses. We've seen this happen many, many times with families; when parents die, the children immediately liquidate the assets in order to spread out the money evenly. But this is where the poor are getting poorer. Once they see the cash, they spend it. It only takes three generations to build a legacy of wealth. If three generations work at an average pace and only acquire without ever selling any of the previous assets, by the time the fourth generation comes in, they'll all be rich. But people are selfish and they would rather spend it all now than secure the future.
Number five: they're financially educated. The truth is the rich are getting richer because they invest in financial education. They learn about how money works, how to buy assets instead of liabilities, how to invest for cash flow, manage debt, or how to control their spending. Think of it like this: let's say you want to bake an apple pie; that is your desire. You must first learn the recipe for an apple pie and then go out and get the proper ingredients. But without the decision to bake that apple pie, there's no need to look for the recipe or get the things you need. There are plenty of recipes for building wealth; we've shared a number of them on this channel. That's why over 4.5 million people have chosen to subscribe already.
Number six: they surround themselves with other rich people and help each other. If your friends are poor, guess what? You're probably poor as well. That's why you and your friends live in the same environment. You've got the same problems and issues, and your lives are pretty similar. But here's a wake-up call: if you stay where you grow up, you will end up exactly like your parents. For some people, that might be enough, while others are looking to make the jump. The people you surround yourself with are one of the biggest factors when it comes to personal success and building wealth. They motivate you, they inspire you to go after bigger things, they call you out on your weaknesses, and support your ideas. You cannot do epic stuff with poor-minded people. The higher the quality of your inner circle, the faster you'll all get to the top. That's why many people believe that your network is more valuable than your net worth. The right friends can make you rich; the wrong ones will keep you poor.
Number seven: they create value. The concept of value is not understood by many; that's why those who do get to leverage it build wealth. Rich people understand that value can be created, while poor people think that value is limited and needs to be divided between people. If you take anything away from this piece of content, let it be this one: a bar of iron costs $5; made into horseshoes, that's now worth $12. Make it into needles, and it's now worth $3,500. Make it into balance springs for watches, and it's now worth $300,000. Your own value is determined by what you're able to make of yourself with the things you have at your disposal. The more you learn how to create value, the richer you will become. So ask yourself: what do you see when you look in the mirror? What can this person be made into? And then go ahead and start shaping yourself.
Number eight: they are not trading their time for money. As long as you're getting paid by the hour, you'll always have a money cap over you because there are only 24 hours in a day, and you can't go beyond it. Even if you were really well paid, life is unpredictable, and things could go wrong, and you would end up unable to physically work. The rich don't have this problem. Their focus is on creating businesses that can work without them running on the hamster wheel. This is another fundamental distinction that helps keep the rich getting richer. Because they're not time-bound to one job for eternity, they can build a business, find great people to run it, and grow it while they jump on to creating something new.
You might be familiar with the term ROI, or return on investment, but rich people don't measure ROI as a priority. Instead, they focus on RO, which is return on time. At some point, you understand money so well that you start to focus on what's really important and valuable: your time. If people understood just how valuable time is, very few people would be willing to sell it for as cheaply as they do today.
They are not controlled by their emotions. This is one of the reasons why average people think of the rich as stuck-up or so serious; they don't care about your meaningless drama because they've got that RO on their mind. Emotional intelligence is one of the strongest weapons someone can have in their arsenal. The ability to control your emotions gives you a massive competitive edge over everyone else. Feelings are important when it comes to emotional issues, not financial issues. Money doesn't care about your feelings.
Okay, as long as you're emotionally invested in your money, you are not owning wealth; your wealth is owning you.
Number ten: they're building the future you're going to live in. We are already living in the world of Jeff Bezos, Mark Zuckerberg, Bill Gates, and many others just like them. They're the ones building the world that we're living in today. Now, of course, the rich are getting richer when they're making the things that we get to use and enjoy. You've got the power to signal what direction they should build in, and they will. You get to vote with your money. There's this really great quote by the late Steve Jobs that really stuck with us: "Everything around you that you call life was made up by people that are no smarter than you, and you can change it. You can influence it. You can build your own things that other people can use."
Once you learn that, you'll never be the same again. The world is made of builders and consumers. Builders get paid; consumers pay others. You need to decide who you want to be.
Number eleven: they understand the rules of the game. Money and building wealth are simple games with a clear set of rules. The more you learn the rules, the better you are at playing the game. So start off with the basics: learn about supply and demand, about assets and liabilities, about creating value and starting a business. Once you do, you can progress into more complex rules and even push them to the limit. The better you are at understanding the rules, the more you can do within the rules of the game. If you don’t know them, seek help. Okay, find people who understand these rules and have them mentor you. Give them something in return, and now you're both growing.
Number twelve: they try to influence the rules of the game. There's a dark side to having so much power and wealth. There's always the temptation of skewing the rules in your favor. And you know, unfortunately, this does happen. One of the reasons why the rich keep getting richer is because they've got direct influence over those people making the rules. This is one of the biggest issues the world is dealing with right now. Money and power corrupt people into wanting even more, and this is a dangerous cycle. We can't rely on anybody to self-govern when their personal interests are at stake.
Something to remember, though: the more efficient the government is, the richer society is. When the system is corrupt, few people get their hands on unearned wealth at the expense of the masses. This is why the general population has such a poor perception of the rich; they assume everybody who got to where they are twisted the rules in their favor at the expense of everybody else. And sometimes, that is the truth.
Number thirteen: they make money using other people's money. Now, here's a magic word you almost never hear average people use: leverage. At the beginning of this piece, we mentioned a person buying a $100,000 house with a $20,000 payment. The main difference is the buyer will not be living in that house. Instead, it'll pay for itself as long as it's managed properly. This is the most simplified version of how the rich use other people's money to build wealth for themselves.
You know what's more important than throwing money away at the club? Credit. Okay, credit allows you to borrow money and make yourself rich. We call this good debt. Poor people become poorer because they borrow money to buy the car or the TV, in the example we gave earlier. That's called bad debt. Now, rich people also rely on their network. The friends we spoke about come together and leverage each other's resources to build more success for themselves. Having this infrastructure of funds and knowledge available for you will dramatically accelerate your growth. Everybody else is busy living paycheck to paycheck envious of their friends, while the rich are helping each other to become even richer.
Number fourteen: they hire the smartest people to protect them. Money can buy security, and we don't mean bodyguards or laser sharks. Okay? Money buys you financial security; your accountants take care of the financial issues on your behalf. It buys you legal security; your lawyers deal with legal issues for you. It buys you medical security; premium doctors can solve issues before they become life-threatening. You can also buy psychological security; therapy and marriage counseling can help you to solve problems before they ruin everything you've built together and many more. These all keep the rich from losing their wealth and power.
And number fifteen: they're not emotionally attached to money. Now, this doesn't mean that rich people don't care about their money, no, because that is not the case; it means they're not emotionally invested in that capital. For some, the next paycheck means stocking up the fridge or getting the car fixed, or paying the bills, maybe getting yourself something nice or a new gadget. You can correlate money to an emotional outcome, but the rich don't have that. For the rich, money is just a number on the screen, and they're playing for a high score. When you remove this emotional connection, you allow for a reason to make the calls in order to get better results.
The rich keep getting richer because they position themselves correctly. They educate themselves on how wealth is being built and what the rules of the game are. They're not emotional about their investments and they always buy for the long-term value, usually with other people's money and at the expense of other people's time. They're building what everyone else is using.
And at the end of the day, wealth is the reward for being really good at the game of money.
And of course, as a thank you for watching this video until the very end, you get a bonus piece of info.
Number sixteen: the rich are getting richer because they're practitioners, not theoreticians. Almost everybody wants to be rich, right? They desire wealth, fame, and success, but they're not making the moves to get there. You can watch as many money-making videos on YouTube as you want, okay? Read all the books, go to all the conferences, and you'll still be behind the ones who are actually putting brick over brick, building their future. Our videos work incredibly well for those who are already moving. They find them ten times more valuable than anybody else because it sparks in them a better understanding of what the next steps they need to take are in order to pick up speed.
Stop saying, "I could have done that," when talking about another person's success, because maybe you could have, but you didn't, did you? The trophy goes to those who are performing, not to those who are spectating. If you really want to win, you have to start making moves. Okay? Start building. If you've got your eyes on the prize and are finally able to go after it, please write the word "trophy" in the comments. Let’s see who's ready to be a practitioner and not a theoretician.