It is not how much you earn that determines how rich you are. It is the habits of the person and their spending habits. It is about financial independence.
The first thing that people should think about when it comes to wealth building is their spending habits. The second thing they should do is set goals and plan, looking at what they would like to accomplish in the future while they work on their current situation. This can be achieved by setting up a budget and sticking to it, never exceed your limits as this will only lead to debt and financial problems later in life.
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Building wealth can be achieved regardless of the salary that a person earns but it depends on their spending, which can often lead them towards a life of poverty unless they make good decisions with money.
The average person spends about 30% of their income. The rich person only spends a lesser percentage. This means that the difference between middle-class and rich people is not how much they earn, but how much they spend.
The real measure of your wealth is not the size of your salary but the size of your financial independence. It's those things you can buy without having to ask permission from anyone else.
Wealth is not defined by your salary or what you make. You can be rich even if you have a low income because it's possible to build wealth through many different activities. There are two different ways that you can go about this, one involves spending less than you earn, and the other involves spending more than you earn.
If your salary is $10,000 then for example, if you spend $8000 it will still leave you with $2000 to invest which will grow over time into more money. Conversely, if your salary is $20000 and spends only $19000 then again it leaves $1000 with which to invest and grow over time into more money. In both cases, there is still a balance at the end of the month but in the first case, there is 1000 more than in the second case. This means that to break even in terms of assets and liabilities you need some financial restructuring.
Having a high income does not imply an instant accumulation of wealth. One must also spend wisely and not be too dependent on spending habits to create a surplus for their future. Paying off your debts and saving up for the future are key factors in building financial independence.
It's pertinent to understand that saving money is the first step to building wealth, and earning more doesn't guarantee riches, you have to deliberate about investing your savings or a part of your earnings to stay on track.
You might be earning a lot but you can't afford to live the lifestyle you want because of all the bad spending habits that you have. You should instead focus on building your wealth regardless of how much money you earn.
It is important to be financially aware. This way, you can plan for the future and make more informed decisions. Moreover, you can do this while living the life that you want rather than living within your budget limits. This doesn't mean living within a budget limit is bad, but it goes a long way so you don't get shaken if any bad happens. Besides, a budget is said to be an embodiment of our values, and this is something worth taking note of.
Bad spending habits can sink even the most successful person’s financial independence. Conversely, even with a low income, if you are smart with your spending, it can lead to financial independence.
Remember, if you want to become rich and secure long-term financial security, it is not just about what you earn but what you spend.