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Personal Finance: What People Buy On Payday

personal finance, money, wealth

Some people think that to become wealthy, they need to live in a certain lifestyle and buy certain things that the real wealthy people have. By doing so many of them would finally end up in a financial turmoil and are far from being what they had always dreamed of: real wealthy or simply financially free.

The truth is, different people with different financial conditions buy different things on payday not because of how much money they have but because of their particular mindset that drove them to buy those things in the first place.

-- When the poor go shopping...

Poor people would go and buy the things we would simply call 'little stuff'. They buy things that are inexpensive (and sometimes useless) simply because they are inexpensive.The 'little stuff' won't cost them much but it won't worth anything to them over the years -- and because the money was all spent on 'little stuff', this will be the only thing they will have.

Some people who are even less fortunate like many in my own country, Indonesia, won't even have 'stuff'. When they go shopping on payday they buy food and maybe some clothes -- just basic things they need to survive for one month.

The poor won't have enough money to save, let alone invest. So what comes in on payday, goes out on 'little stuff' or food to survive. They simply just don't educate themselves that their income could have been used to create more income -- and this has caused a lot of financial pain. Yet, it does not need to be this way.

-- When the middle class go shopping...

These are successful people with well-paying jobs and great carreer. Because of this, society mistakenly considers them as 'the rich'. The middle class would buy things that we would call 'liabilities'. Liabilities are things that cost you money. A car would be a liability -- you would spend money on gasoline, insurance and not to mention the thousands of dollars of monthly payment for the new car. A house should also be considered as a liability -- although some people would call it 'asset', we can't escape the fact that buying and owning a house would actually cost you -- which makes this more a 'liability' instead of an 'asset'. But when you buy a house and rent it out and it pays you money regularly, then the house is called an 'asset'.

Typically, the middle class split their big fat check into two and one portion of it goes out to pay for the downpayment of a new car (or a new house) or anything that are actually 'liabilities'. By the next month, they will have created another thousands of dollars of monthly expenses for paying the installments. After this, they would want a new Rolex watch, or another car, or a boat, or an expensive vacation.

The middle class may make big fat paychecks because of their successful carreer. But if the money that comes in are constantly spent on 'liability', it won't take long until they wind up highly stressed out in a financial turmoil. In the end, the middle class find themselves enslaved by their jobs because of the liabilities. It means they have no choice than to go to work and make more money every month to be able to pay off their liabilities.

The problem with both the poor and the middle class is, generally their income is dependant on their own effort/ time. The case with the poor is, that they exchange their time with their employers money -- while there is only so much you can do in 24 hours with your own effort. On the other hand, the middle class exchange their high education and expertise with someone else's money. As soon as they stop 'exchanging' time and education, the money stops coming.

-- When the real wealthy go shopping...

Real wealthy people would go out and buy things that we would call 'asset'. Assets are things that pay you money. The example would be investments, stocks, bonds, real estate,... Another example of asset is education. If you buy education and apply it to produce income, your education is an 'asset'.

Real wealthy people would always put aside a certain portion of their income to buy assets like those. The wealthy simply spend their money on things that can produce more money.

If you want to become wealthy you have to find assets that would earn you income and with the income, buy more assets to earn you more income and so on. One example of affordable asset you could buy is a business. Any business that creates for you passive ongoing income is your asset. Passive income is income that requires little work or no work at all. This type of income is the income that you earned from work you did just once.

There are numerous of passive income creation opportunities. One asset that I have found (and is affordable for me) is investing in my own small business, Success University -http://www.e-money-machine.com. I find this an invaluable asset because I have free access to the most powerful success oriented personal development education, presented by over 50 of the world's greatest minds in personal achievement. The education that I get is applied in my day job, causing me to earn even more income than before. And the business opportunity of Success University -http://www.e-money-machine.com, is just an outstanding asset that allows you to earn money even during your 14 day free trial.

This article has been written in the hopes that it will be an eye-opening piece of information on managing you personal finances better.

Resource Box:

Dinar P. Wiria-Atmadja earns money as a student of Success University -http://www.e-money-machine.com. She is also the owner of Proven Map to Success & Financial Freedom - http://www.financialfreedomawaits.com.

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