A liability is something that takes money out of... A liability is something that takes money out of my pocket
This is really all you need to knowIf you want to be rich, simply spend your life buying assetsIf you want to be poor or middle class, spend your life buying liabilitiesIt's not knowing the difference that causes most of the financial struggle in the real world
Illiteracy, both in words and numbers, is the foundation of financial struggleIf people are having difficulties financially, there is something that they cannot read, either in numbers or wordsSomething is misunderstoodThe rich are rich because they are more literate in different areas than people who struggle financially So if you want to be rich and maintain your wealth, it's important to be financially literate, in words as well as numbers
The arrows in the diagrams represent the flow of cash, or "cash flow Numbers alone really mean littleJust as words alone mean littleIt's the story that countsIn financial reporting, reading numbers is looking for the plot,
louis vuitton bags in uk the storyThe story of where the cash is flowingIn 80 percent of most families, the financial story is a story of working hard in an effort to get ahead Not because they don't make moneyBut because they spend their lives buying liabilities instead of assets
For instance, this is the cash flow pattern of a poor person, or a young person still at home:
Job (provides income)-> Expenses(Taxes Food Rent Clothes Fun Transportation)
Asset (none)
Liability (none)
This is the cash flow pattern of a person in the middle class:
Job (provides income)-> Expenses(Taxes Food Mortgage Clothes Fun Transportation)
Asset (none)
Liability (Mortgage Consumer loans Credit Cards)
This is the cash flow pattern of a wealthy person:
Assets(stocks bonds notes real estate intellectual property)->income (dividends interest rental income royalties)
Liabilities (none)
All of these diagrams were obviously oversimplifiedEveryone has living expenses, the need for food, shelter and
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The diagrams show the flow of cash through a poor, middle class or wealthy person's lifeIt is the cash flow that tells the storyIt is the story of how a person handles their money, what they do after they get the money in their hand
The reason I started with the story of the richest men in America is to illustrate the flaw in the thinking of so many peopleThe flaw is that money will solve all problemsThat is why I cringe whenever 1 hear people ask me how to get rich quicker Or where do they start? I often hear, "I'm in debt so I need lo make more money
But more money will often not solve the problem; in fact, it may actually accelerate the problemMoney often makes obvious our tragic human flaws Money often puts a spotlight on what we do not knowThat is why, all too often, a person who comes into a sudden windfall of cash-let's say an inheritance, a pay raise or lottery winnings-soon returns to the same financial mess, if not worse than the mess they were in before they received
new chanel bags the money Money only accentuates the cash flow pattern running in your head If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spendingThus, the saying, "A fool and his money is one big party," I have said many times that we go to school to gain scholastic skills and professional skills, both importantWe learn to make money with our professional skillsIn the 1960s, when I was in high school, if someone did well in school academically, almost immediately people assumed this bright student would go on to be a medical doctor Often no one asked the child if they wanted to be a doctor It was the profession with the promise of the greatest financial reward
Today, doctors are facing financial challenges I would not wish on my worst enemy; insurance companies taking control of the business, managed health care, government intervention, and malpractice suits, to name a fewToday, kids want to be basketball stars, golfers like
gucci canvas bag Tiger Woods, computer nerds, movie stare, rock stars, beauty queens, or traders on Wall Street Simply because that is where the fame, money and prestige isThat is the reason it is so hard to motivate kids in school todayThey know that professional success is no longer solely linked to academic success, as it once was
Because students leave school without financial skills, millions of educated people pursue their profession successfully, but later find themselves struggling financiallyThey work harder, but don't get aheadWhat is missing from their education is not how to make money, but how to spend money-what to do after you make it It's called financial aptitude-what you do with the money once you make it, how to keep people from taking it from you, how long you keep it, and how hard that money works for youMost people cannot tell why they struggle financially because they don't understand cash flowA person can be highly educated, professionally successful and financially
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