How to Manage Your Money Like the Wealthy

Summary

The secret to joining the richest 1% isn’t just about earning more, but about owning valuable assets. Wealthy individuals own businesses, assets, trusts, and rare skills that are difficult to take away. To build wealth, focus on investing 25% of your income in appreciating assets like stocks, real estate, and skills development. Avoid unnecessary spending and prioritize financial discipline. By building a business, growing your investments, and focusing on skill acquisition, you can follow the path of the wealthy and achieve financial freedom over time.

Takeaways

• 😀 The wealthiest people don't just earn money, they own valuable assets like businesses, real estate, and rare skills.
• 😀 Entrepreneurs, investors, inheritors, and athletes/entertainers all have one thing in common: they own something of value.
• 😀 If you want to build wealth, start by asking yourself: Do I own a business, valuable assets, or rare skills?
• 😀 To break free from the paycheck trap, invest 25% of your income in appreciating assets like stocks, real estate, or Bitcoin.
• 😀 Focus on financial discipline—avoid spending your paycheck on non-valuable things like luxury vacations or clothes.
• 😀 Inflation reduces the value of cash, so invest in assets that grow faster than inflation, like stocks or gold.
• 😀 Index funds (like those tracking the S&P 500) are a great way for beginners to start investing, with an average return of 8-10%.
• 😀 Real estate can offer substantial returns and tax benefits, but if capital is limited, consider investing in REITs (Real Estate Investment Trusts).
• 😀 Don't just invest in assets—invest in valuable skills to increase your earning potential, such as sales or high-ticket closing skills.
• 😀 Starting a business can be one of the most effective ways to build wealth, but do so with a solid business plan and low startup costs.
• 😀 Manage your money wisely: Allocate 50% to essential expenses, 25% to investing and savings, and the remaining 25% for debt repayment or personal expenses.

Q & A

What is the key to joining the richest 1%?

The key is not necessarily how much you earn, but what you own. Wealthy individuals own valuable assets that cannot easily be taken away by the system.

What do the wealthy have in common?

The wealthy, including entrepreneurs, investors, inheritors of wealth, and athletes, all own something of extreme value—businesses, assets, trusts, or rare skills.

What are the four categories of wealthy individuals?

The four categories are entrepreneurs (75%), investors (15%), inheritors of wealth (7%), and athletes, entertainers, and artists (3%).

Why are W2 workers not included in the list of wealthy people?

W2 workers typically do not own assets that appreciate in value, unlike the wealthy, who own businesses, assets, or rare skills that build wealth over time.

What is the first step to building wealth, according to the video?

The first step is to invest 25% of your income into assets that appreciate in value, such as stocks, commodities, Bitcoin, or real estate.

Why is it important to invest instead of spending money on non-appreciating items?

Spending money on things like expensive vacations, cars, and clothes may provide short-term satisfaction, but it doesn't build long-term wealth. Investing in appreciating assets is key to growing your net worth.

What types of assets should you invest in to keep up with inflation?

You should invest in assets that have a rate of return higher than the inflation rate, such as the stock market, real estate, or gold. Inflation erodes the value of cash, so investments are necessary to maintain or grow wealth.

How can you start investing if you're a beginner?

A simple way to get started is by buying an index fund that tracks the S&P 500, which historically returns 8-10% annually. It's a good option for beginners looking to build wealth gradually.

What are REITs, and how can they help with real estate investing?

REITs (Real Estate Investment Trusts) are companies that manage, own, or finance income-producing properties. They allow investors to participate in real estate markets without having to directly purchase properties.

What is the importance of investing in skills?

Investing in skills that increase your earning potential can be one of the best ways to grow your wealth. For example, taking a course to gain valuable skills in sales or high-ticket closing can dramatically boost your income.

How can starting a business contribute to wealth-building?

Starting a business can be a great wealth-building strategy, as businesses have the potential to scale indefinitely. Many of the wealthiest people are entrepreneurs, and owning a successful business can lead to significant financial rewards.

What should you do with the remaining 75% of your income?

The remaining 75% should be allocated to essential expenses like rent, taxes, food, and utilities (about 50%). The rest can be used for debt repayment, emergency funds, and personal expenses to ensure financial security and balance.

What is the bottom line for building wealth, according to the video?

The bottom line is that the wealthy focus more on growth—investing in assets, skills, and businesses—rather than spending on unnecessary expenses. They build multiple income streams and acquire valuable assets to achieve financial independence.