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Why Do the Rich Get Richer?

There are a few different reasons the rich get richer. We will go through some of them in this post that I think will have the most impact. The biggest reason is that they have more money left, after all the necessary expenses to invest and save.

They are also used to having more money, and they think about it differently. If you change the way you think about money, you can start saving and earning more as well. Most of the times, someone who is really rich, doesn’t have their income tied to their time. This allows them to make money even when they sleep.

Their every-day living costs take a smaller piece of their income

When you start comparing someone who makes 2000 dollars a month and someone who makes 20 000 dollars a month, we can see the difference really well.

Some living costs stay the same, even if you have increased your living standards. There is only so much you can eat and spend on restaurants. Yes, you can go to more expensive restaurants and this way increase your spending, but there is a limit on how much you really can spend on food and drinks in one month.

For someone who makes 2000 dollars, food and drinks can easily take 25 to 50% of your monthly budget. For the one who makes 20 000 dollars a month, using 10% of their income in food and drinks is 2000 dollars. With that money, you can eat out every day of the week.

Because a smaller part of their income goes to food and drinks, they will have more money left over to investments and other ways they increase their wealth.

Another thing is transportation. If you make more, you can buy more expensive cars and such, but insurance and fuel costs are almost the same, no matter how much you make.

This is probably the biggest thing that makes the rich get even richer. You can earn a million dollars a month, but it is really hard to keep spending 25 to 50% of your income on food and drinks. They have much more to invest and grow, and this way they get even richer.

They think about money differently

For someone who works on a minimum wage, money is a necessary evil that you trade your time for. It will help you buy food and keep you alive.

For the rich, their money works for them. They don’t trade their time for money. This doesn’t mean they don’t work, but their income is not tied to their time.

If you find a way to make money that is not tied to your time, you are on the right path. It is also important to keep saving and investing part of your income. If your income increases by 20% and your spending increases by 20% as well, are you really getting richer?

One way to go is to increase your spending by 10% if your income increases by 20%. This way, you can lift your living standards while also putting more money into investments that will make you get richer with time as well.

Related posts

Understand how money works

Think about money as time to spend it more wisely

The reason the rich are rich

There is always a reason someone is rich. That might be good money management from a high paying job, or it might be that they started their own company.

If you wish to become rich by starting a company, you really need to bring value to other people. Sell something that will make others lives easier. The more people you can help, the more you can earn. I have posts about starting and improving your business, you can read them here.

Even if someone was just born into a rich family, they need to have some knowledge about money management, or they won’t stay rich for long. It all comes down to the right mindset with good money management.

Exceptions

There are people, who earn a lot but also spend a lot. Even if you earn a million in a month, if you spend a million, you really don’t get richer. It is really up to you how much is the difference between your earnings and spending.

So, who really is the rich? It depends on your spending habits. If you spend everything you earn, are you really rich? You might have nice cars and clothes, but you are still a slave to someone who pays you.

In my eyes, the ones who have the freedom to do what they want, have their money working for them, are the rich ones. If you make 2000 dollars a month without doing any work at all, you might be richer than someone who makes 100k a month who spends it all. Being rich is relative.

Good news

I have some good news for you. Even if you don’t consider yourself a rich person, you could become one. If you are lucky enough to be reading this text, chances are you’ve got everything it takes to become rich. I have a post on how anyone can make a million dollars; you can read it here.

Even if you don’t need a million dollars, the post can give you good ways to increase your income to the point, where you are rich. Where you achieve that freedom, if you decide not to work anymore.

Another related post to this topic is different levels of financial freedom. You can read it here. It is about how much passive income or savings you need, to achieve certain levels of freedom for your life.

Final words

The rich do get richer, and you can join the rich who get richer. Everybody has gotten to the “rich” in some way. You can make yourself rich as well. With the right mindset and right decisions, you can find yourself on the better side of the saying “rich get richer”, instead of complaining about it.

Hopefully this was helpful to you, have a nice day.