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How the Rich Make Money

golden_eggs.jpgThe Federal Reserve recently published some new wealth data [PDF]. They looked at levels of net worth and the income associated with each. They defined net worth as total assets (including a primary residence) minus any money owed.

You need a net worth of over $8 million to make the top 1%, $2 million gets you in the top 5% and it takes about $900,000 to place yourself in the top 10%.

So those are your targets if life on your own terms means being in the top 10% or above.

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Making more doesn’t mean having more

This report also looked at share of total wealth. As it turns out, the richest of the rich – the top 1% – didn’t get richer. They still held approximately one-third of the country’s total wealth in 2007, the same as 1995.

However, their share of income was up significantly – from 17% in 1997 to 22% in 2007.

The wealthiest people in our country saw a bigg increase in share of income, but their share of net worth didn’t go up. Does that mean rich people got caught up in the “spend, spend, spend” economy? Possibly.

We often think, “If I could just make a little more money.” This study offers further proof that making more doesn’t necessarily translate into having more – even for the richest among us!

Make do, then make more

The crucial thing – the starting point – is to figure out how to make do with what we already have. Then when we make more, we’ll have more because we manage it all better.

We can enjoy some of it now and invest the rest for our future – for the life we dream of living.

How the rich make money

As might be expected, the average person gets most of their income from salaries and wages. As we move to the top 5%, we see that a larger share of income comes from business ownership and investment real estate.

It really kicks in for the top 1%. Plus they have built up enough assets to get a significant boost from selling those assets for a profit. It’s Economics 101 – buy low and sell high.

But it’s no panacea

We’ve recently seen people losing money in business and real estate. Like most things, it’s no panacea. It’s risky. But if you aren’t trying to get rich quick, you can greatly improve your odds.

The best advice

We also found it revealing that this study showed that the bottom 50% lost money holding assets and from the ownership of businesses and real estate.

The rich made a lot. The bottom half lost money. What do the rich know?

Before you jump into investing in a business or real estate, educate yourself. Get advice from someone who’s actually succeeded at it. If they’ll mentor you, that’s great. If they charge you for it, it will be worth every penny.

You’ll get where you want to be faster by learning from people who have done it rather than trying to learn it on your own.

So if life on your own terms means building wealth, get started creating multiple streams of income today – even if it’s just part-time!

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Please join us next time when we ask, “Are you talking to the right person?”

Thanks for reading our post today. Until next time, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00381-042709.mp3

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(Image in today's post by barunpatro)

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Is Convenience Busting Your Budget?

time-money The good people at CareerBuilder recently posted the results of a survey of workers. Forty-seven percent of the people surveyed said they “always” or “usually” live paycheck to paycheck.

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Does more money help?

One way to stop living paycheck to paycheck is to make more money. Forty-two percent said an additional $500 each month would help make ends meet.  Fourteen percent already work more than one job.

The amount of money that comes into a household does make a difference, but not as much as you might think. Twenty-one percent with salaries of $100,000 or more said they also live from payday to payday.

We’re working ourselves to death instead of thinking about the other solution to the more month than money problem. We need to look at our lifestyle. We’re so busy trying to make more money to support our lifestyle that we end up spending money we wouldn’t need to spend if we just slowed down and honestly assessed our situation.

Convenience expenses

We’re so busy that we spend more money on “convenience expenses”. We define convenience expenses as the premium we pay for goods and services because we don’t have time.

So we end up in a downward spiral – we work more to have more, but then we
spend more and we don’t have any time to figure out how to do anything differently.

One example of a convenience expense is that we eat out more than we plan to. An appointment runs long. We get stuck in a traffic jam. The boss needs to talk. The next thing you know it’s late. Now we feel we have no choice. We’ve hit that wall. We’re hungry now! We’re too tired to do anything but grab some carry-out or order delivery.

Cutting back

It may seem like a small expense, but it eats away at your budget (pun intended). If you’re feeling like we’ve described you perfectly, don’t feel like you’re alone. We’re right there with you! Here are some ways we’ve found to cut back on this convenience expense:

Always stock some food that’s easy to stick in the oven or microwave.

Then if you’re running late, you can have less expensive convenience food. Plus you’ll save the time of stopping or running out for carry-out.

Plan for leftovers

If our next week’s schedule looks busy, we’ll cook up a little extra food on the weekend so we have leftovers which can be nuked in a matter of minutes. These leftovers are also an excellent way to save money on going out for lunch. There are more productive ways to spend a lunch hour than driving back and forth.

Invest time today to save money tomorrow

By planning next week’s meals, you can find coupons for the items you want to purchase. It’s like printing money legally as we learned from Crissy Thompson, who often spends as little as $10 a week to feed her family of five.

You can also think about where you shop. They’re called “convenience stores” for a reason! We pay a price to be able to run into the store and grab something on our way home.

This is just one example of the many convenience expenses. If you’re living payday to payday or not saving as much as you would like, think about your convenience expenses and the time / money interplay.

There is a huge trade-off between time and money. If you have money,
you can save time. If you don’t have money, it’s important to really
 think about how you’re using your time and try to save money.

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You can get the tips and tools you need to be a bigg success
Subscribing to the Bigg Success Weekly! It’s conveniently e-mailed to you once a week. And it doesn’t cost you any money! But the time you spend reading it will help you make and save money! How’s that for a deal?

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Next time, we’ll discuss how to create wealth in today’s new economy. Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00261-111008.mp3

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(Image by lusi)