Q. What is something wealthy people do that poor people don’t?
answered by Mike Heraty, studied at Columbia College Chicago
A lot of rich hating responses here, ostensibly eminating from a dislike/distrust/outright hatred of people with money.
While I’m sure that sates some inner need to rage at those with means for some people, it does little to nothing to help the poor or destitute improve their own situation.
What wealthy people do that the poor don’t is understand the dynamics of money. By realizing that money is a tool and that using it effectively will build wealth, many destitute people could vastly improve their and their families future.
I’m not going to get into topics like compound interest, amortization, or dollar-cost averaging as those are topics best introduced when someone actually has some money to work with. For practical reasons, I’ll keep it simple.
Off the top of my head, here’s a few things the poor can do to improve their own situation;
There’s other things that help, too.
Stop drinking/smoking/doing drugs. Not only do these things cost money, they damage your health and reduce your productivity – both things that further limit the ability to save and build wealth. I realize that this is easier said than done, but if the poor would save the money they spend on cigarettes, booze and dope they would be well on their way to financial independence.
Ditch the car payment/buy a beater/walk or bike to get around. I realize that it’s not possible for most poor people to do without a car for various reasons, but in many cases financial distress is directly related to the want of a car. If possible, walk or bike to get around. It’s not only healthier, but the money you save will add up quickly. A $400 car payment doesn’t build wealth.
Forget about YOLO/FOMO/Treat yo’self. These are immature ways of looking at things, and the amount of money spent chasing these ideas is astonishing. Skip the Lollapalooza ticket and buy a CD certificate instead. Don’t drop $50 on shots at the bar, put that money in your IRA. Unless you’re fiscally liquid, forget about that tattoo sleeve. These things add up quickly.
Hustle for extra money. Ask around The neighborhood to see if anyone needs help with household chores. Elderly people often need help – see if any are willing to give you a couple bucks for odd chores. Check with local churches, senior centers, and other organizations. You may be surprised. I myself delivered flyers for 5 hours a week at $12 an hour. I didn’t need the money, instead I did it for the exercise and invested the $50 a week. That $2,500 a year is still drawing interest to this day.
Look for deals. If you’re not buying toilet paper, toothpaste, shampoo and stuff like that in bulk you’re wasting money. Focus on things you actually need (not want -need) and buy them on sale, in bulk, or both. Shopping for stuff like this at a Walgreens is like burning money. The deals are out there – find them.
By doing these things and saving the money, you’ll have a nice little nest egg much quicker than you think. Use that nest egg to start a no-load, low risk, rated mutual fund. Add to that fund on a regular basis and it will grow. Consult a financial professional for more info on how to effectively do this.
Read these books.
The Richest Man In Babylon – Clason
The Millionaire Next Door – Stanley
Good luck to you!
comment by Ross Wilson – More suggestions: Make sure you’re not born into an abusive family or a family with mental health issues. Also make sure you’re not born into a family with any chronic Illness either at your time of birth or later on during your developing years. Make sure your only affordable education options are really good dispite their low cost. And make sure nothing random happens to you or your family as you’re being educated. Make sure no economic trauma happens to you even if there’s nothing you can do about it or to prevent it. Also don’t live in a poverty stricken area you won’t be able to sell the family home even if you want to move. And if you’re any other ethnicity other than white that’s bad news for your chances so be born white. All that before you make any actual mistakes yourself! Avoid all that andnhave luck and you’ll be golden.
Reply by Mike Heraty – Wow! Talk about a boo hoo manifesto!