Reasons Why People are Poor, Middle Class and Rich.

Have you ever wondered why poor people get poorer, the middle class are overworked and the rich get richer. It's not an accident, the rich understand something. The amount of money that you have right now will depend on what formula you are using. I hope this article change your financial life.

LEVEL 1- POOR/ BROKE PEOPLE

FORMULA NO. 1

INCOME- EXPENSE= SAVINGS

The above formula has been mastered by the poor and broke. Poor people is this; whenever they receive their salary the first thing they do is spend it on in everything they think is necessary. They pay their taxes, pay their bills, take some for their leisure and then there's nothing left to save. Then they blame the government for not giving higher minimum wage, when in fact their problem is within themselves.
Unfortunately, if their expenses are much greater than their income then the result instead of savings is debt. Is that true? YES! Ask those people who spend their wants thru the credit card. Before they receive their income it was already literally spend before their pay day. It doesn't matter if you're earning P10,000 a month or P100,000 if this is your formula chances are you are broke right now, you are still poor.




LEVEL 2- MIDDLE CLASS

FORMULA NO.2

INCOME-SAVINGS= EXPENSE

This is a better formula than FORMULA NO.1, this is the formula used by the middle class. Unfortunately, this formula is obsolete because the average interest rate of banks on savings account  is less than 1%, not inclusive of the 20% tax. Then consider the inflation rate of (the decrease in purchasing power of money) which is about 5% in the Philippines.
So put this into mind next time you save your hard earned money. It's a guarantee that you are losing 5% value, compounded annually. Learn to invest on your financial literacy first, then invest a portion of your savings. Investing won't be risky if you are financially literate.
 You can thank me later. =)





LEVEL 3- RICH PEOPLE

FORMULA NO.3

INCOME-INVESTMENT-EXPENSE

Money makes more money;

Investing your money is the primary means of expanding your wealth. Not just invest of course but beat inflation. Through this, you can turn your money into something bigger than it was before. Why then are the ordinary people afraid to invest? Because most them are driven by fear; they let their fear stop them to become rich. Fear is a natural instinct, it serves as a warning that danger is close, however, this shouldn't apply for ones who want to reach financial independence. From the words of billionaire Enrique Razon, "Di ka pwedeing sigurista, pag natakot ka, talo ka"


REMEMBER: Invest on yourself first. Buy a good book, sit down and read.


Source: Financial Planning for the Fast Changing World by Christopher Cervantes.


THANK YOU FOR READING