Warren Buffet says; “the rich are rich not because they look rich but because they possess the skills and strategies of the rich.
To break Buffet’s statement down, a skill is an ability to do something well, an expertise. While a strategy is a series of manoeuvres for obtaining a specific goal, or setting goals and determining actions to achieve the goals.
So what are the skills and strategies of the rich?
1 THEY KNOW WHAT THEY WANT The number one secret of the rich is that they know exactly what they want. They acknowledge that they want to be rich,and they know that it’s down to them to take the necessary steps to transform their dreams into reality. They don’t leave anything to chance. They are men and women of purpose and you can see that in whatever they do.
2 THEY HAVE A PLAN TO BE RICH After the decision to be rich comes the plan or detailed proposal on how to be rich. A plan to be rich is a series of steps to be taken or goals to be accomplished that would enable the individual to be rich.
A plan is therefore a design of how you want the future to look like. The plan will consist of the goals you want to achieve in order to attain millionaire or billionaire status.
3 THEY HAVE MULTIPLE STREAMS of INCOME Multiple streams of income equals financial security and is in fact the most efficient way to build wealth. Research has also shown that every rich man has on average seven streams of income.
Those incomes include earned income and passive income. Earned income is income from your work, e.g salary. Passive income on the other hand is Income from your investments such as interests,dividends, rental income, royalties, etc.
Mostly the way they do it is that they use their earned income to set up their passive income, and then use money making skills to build their business empire.
4 THEY ACTIVELY SAVE AND INVEST Frugality is the cornerstone of wealth building and the majority of rich people are frugal, especially when starting out. They spend less,save more and actively invest their money.
And when they invest they invest in assets that have the potential to grow in value while bearing fruit along the way. In particular they pay attention to the latter, because if the latter is is place, the former will follow. If for instance a company pays dividend regularly, then it’s share price is likely to increase in value. Likewise if a property produces rental income regularly, it’s value will be high.
5 THEY ALWAYS SEEK TO EXPAND THEIR MEANS Some financial advisors will tell you that in order to reach your financial goals you must learn to live within your means, or even below your means. Such an advice is financially limiting and does not allow you to use your imagination and creativity, and the rich know this, that’s why they would rather work to expand their means rather than live below their means.
This is one important secret of the rich. They are always working to add more and more streams of income to their portfolio. And they ensure that the streams of income are not just many but also of high quality like prime real estate and stocks of top quality companies.
6 THEY MINIMISE THEIR EXPENSES The rich are conscious of their spending. This is because they know that in order to save more you must spend less,in addition they analyze their expenses and create goals for their money. Having goals for their money will make it difficult to indulge in unnecessary purchases since any money that’s coming in will go toward achieving those monetary goals.
Generally, they devise ways to cut expenses on food, clothing and transportation which are considered the big three expenses.