The gap between the rich and poor is a political football. Sometimes called the difference between the ‘haves’ and the ‘have nots’.
Identifying the ‘have nots’ is not hard. Identifying the ‘haves’ is a little trickier.
A nice house and a quality car on the drive may seem perfectly logical indicators of wealth. But, you don’t have to be wealthy to look wealthy.
If the large house and car are bought with borrowed money (money which gobbles up income leaving little disposable left at the end of the month,) then that’s not true wealth.
Wealth isn’t defined by what’s on your drive, but rather what’s in your bank account.
In Donald Trump’s book ‘The Art of The Deal’, he recalls walking down 5th Ave with Ivanna on his arm. He was struggling with his businesses, and found himself heavily in debt. He pointed at a bum begging in the street and said to Ivanna ‘that guy’s wealthier than me’.
‘How so?’ Asked Ivanna.
‘Well,’ began Trump, ‘that guy has nothing. I’m $20 million in debt, so he has $20 million more than me’.
Looking rich and being rich are two very different things.
The very real gap between the ‘haves’ and ‘have nots’, is the gap between their income and expenditure.
The ‘have not’s’ money is all gone by the end of the month, leaving them nothing for savings.
To be a true ‘have’, your expensive lifestyle doesn’t compromise the amount you have left at the end of the month to invest/save.
If you live a frugal lifestyle, (forgoing the usual trappings of apparent wealth,) you can have true wealth. Your frugal lifestyle will widen the gap between your income and your expenditure.
That gap between income and expenditure is a massive comfort (or crushing anxiety if it isn’t there).
Cutting expenses to a minimum is the easiest way to create a gap, but its effectiveness is finite – you can only cut so far.
Some of these options are easier than others.
My preference is to work more. Why? Well, I have no qualifications or recognised skills. I’m self employed. I’m already the boss, so there’s no scope for promotion. PLUS, most people are lazy and content to do the very least in order just to be average.
My willingness to work the face off most people gives me an advantage.
By working 70 hours per week, I’m able to save/invest up to £1800 per month.
The gap between my income and expenditure is encouraging – although I’m not yet wealthy.
What is ‘wealthy’?
Let’s leave that for another blog.
Much of life comes down to the choices we make. Everything comes at a price though.
Most people aren’t willing to pay the price