The Rich Do Have a Secret
Wednesday, March 8, 2017 5:34
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Many Americans – average folks working to build a comfortable life – assume the “rich” have a secret.
It seems they know something about “how the world works” that the rest of us don’t.
If regular folks could just figure it out, they’d be wealthy, too.
They’d live with less stress, more time, and more money. And money, after all, gives you the freedom to do what you’d like to do.
It turns out, the wealthy do harbor a secret – more than one, in fact. And these secrets not only build wealth, they allow you to use it to live the life that you want to live.
Today, I’m going to share one of the most important secrets to building financial security with you…
The first step to building wealth is not to increase your income… The first step is to curb your spending. Outside of a few things, spending rarely brings joy. Identify the things you truly enjoy spending money on, and forget the rest.
Humans are notoriously terrible at predicting what will make them happy. “We expect the next car, the next house, or the next promotion to make us happy even though the last ones didn’t and even though others keep telling us that the next ones won’t,” Harvard psychologist Dan Gilbert explains in his book Stumbling on Happiness.
We get a nice warm feeling when we buy a new television or pair of shoes. So we tend to search that feeling out. Retailers and advertisers have become adept at targeting it.
But it’s short-lived. The thrill of these things wears off quickly. The possessions don’t change our lives in any way.
By contrast, saving money and using it to increase your personal financial freedom does make lasting improvements to your well-being and quality of life. Money saved generates future income. Income is what sets you free. And freedom is what truly makes us happy.
But many people do the exact opposite of saving. They don’t just spend the money they have… They spend money they don’t have in pursuit of some unachievable happiness.
Folks in America like to keep up with the Joneses. The problem is, the Joneses are financially irresponsible. They’ve got too much house, leased luxury cars, and too much credit-card debt.
If you try and keep up, you’ll get dragged down as well. A 2013 study showed that 47% of Americans, even many with high incomes, wouldn’t be able to come up with $400 in cash to fund an emergency.
When you see someone who seems to live too well for the job he has, he doesn’t have a secret skill.
He often has a secret pile of debt.
But you don’t have to become a monk. One benefit of wealth is having money to spend on a few things that bring you joy. For me, I don’t hold back when spending on books or travel. It’s different for each person.
Once again, a good rule of thumb is to choose one or two things you truly enjoy spending money on. Then cut back to just the basics on everything else.
For example, I still drive the same 13-year-old Hyundai. It serves me well, and I don’t have to make payments on it. Instead of laying out money for a new BMW that won’t make me happier… I can spend the money that would have gone to a car payment to treat myself to a couple of really nice dinners each month.
When you learn to stop buying things that don’t make you happy, you’ll have the freedom to enjoy the things that do… like time or relaxation.
All you need to do is give up the things that don’t make you happy in the first place.
I think everyone should start by socking away at least 10% of your annual income. Try to bump that up to 15% as you get comfortable with your new spending habits.
The key to saving isn’t about raising your income. It’s not about saving a penny here and a penny there. It’s about understanding yourself better and shaking all the frivolous desires from your mind.
Once you’ve got that down, you can set your money to work for you…
Here’s to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor’s note: The U.S. government is on the verge of making a huge change to our money… And Dave recently reported a way that ordinary Americans can make extraordinary gains from this historic shift. (The last time this kind of move happened, a few everyday citizens made upward of 1,088% on their pocket change.) But nobody’s talking about it… yet. Click here to learn more.
Source: http://www.stansberryresearch.com/dailywealth/3486/the-rich-do-have-a-secret
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The secret is:
1) Financial Advisors
2) Tax Loopholes
3) Social Connections – i.e. the Private School & College, get your kids into positions of wealth and influence where they do not have to work.
4) Education as in 3) the Private school system pushes the child into University level education and expects each child to enter University as the de facto norm.
5) Inheritance, primarily wealth trickles down the generations. i.e. Marquis or Duke of Westminster Gerald who suddenly was pulled away from his fathers beef farm to mange what was then a multi million pound estate.
6) Invest not spend.
7) Actually do not get involved in secret societies & religious cults, they exist to remove wealth from individuals.
8) Have sons, daughters demanded a dowry and simply kept themselves out of the business side of the family, sons were contributors as Directors, Managers, Daughters when married split wealth from the family into their spouses household.
9) Never gamble or take drugs – addictions and early death ruined many families
10) Make a valid will, ensure the eldest SON is made heir to the majority of the estate, the other children must be either married into wealth or be pushed into contributory roles. The Royal Family calls itself The Firm, think about it, the enterprise is multi generational and every aspect is costed and thought out in the long term. Since the time of Prince Albert, management of the house finances became paramount so there are no hangers on allowed in the Royal Household, turning what was a sieve into a Multi Billion pound boat in less than a century.
11) Good Parenting, amazingly enough the very wealthy are so busy making wealth they have little to no time to be parents so hire Nanny’s.
12) No direct involvement in political party politics – amazingly enough, again like involvement with religious cults, the political party is a spendthrift organization of ideas people without the ability to make it in the real business world, financially they are extremely good at unlimited spending and the majority of their leaders spend time extracting money from members and donors with little to no accountability or personal risk – they all seem to be the public arm of some special interest group and unless you can make serious money from them they exist to extract it from you for no gain bar cheap words of praise. Time spent on their transitory issues is time not spent on the family business, Wo unto thee if you become a donor trying to gain influence, which is transitory as direct sunshine on a cloudy day. Send a second or third son into office to make money from the system they created.