Thursday, April 12, 2007

The secret to becoming rich.

Don’t spend all your money.

That’s it. That’s the secret.

Stop for a moment. Ruminate on that.

A man who earns $60.00 in a day, spends $55 on necessities (shelter, food, water) and keeps $5.00 for emergencies. After a month (20 working days) $60-a-day-man has $100.00.

Another man makes $480.00 a day ($60 an hour). In one month - 20 working days - he earns $9,600. But $60-an-hour guy spends $9800 a month on his shelter, food, water and other things he deems necessary. Each month he’s deficit $200.

But no worries,
$60-an-hour guy uses his handy credit card to offset that pesky amount. After all, he makes $9,600 a month, he can pay off that $200 charge anytime. Right?

Which man is worth more? Which man is richer?

The man making $480 a day? Well, he's living rich but he's not really rich.

Being rich means being able to sustain yourself for a certain amount of time without working. So, the "term" rich is really just a measuring tool -- a measuring tool involving time.

So, technically, you can be rich for a day, a week, several months, a few years or indefinitely. In America, we think of "rich" as being able to live indefinitely, in comfort (whatever that really means), without the requirement of a "job."

This is an interesting concept because I know a few people that could live quite comfortably with a tent, some camping gear, a good pillow and a sleeping bag. All they require is food and a place to use the bathroom and shower. If you gave them $10,000 they could possibly sustain themselves for a year or more. Are they rich?

Not in America's view, but technically because they don't require to "job" to take care of their needs, technically they are rich. Hmmm.

Here is Punny Money's outlook on Why Net Worth Is a Poor Measure of Wealth, it is simply fascinating!

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