Everyone knows how to spend money. But do you know how the rich spend their money? What do the wealthy real estate investor, wealthy business owner, and the wealthy CEO do with their money that is different from the average person? I can tell you right now that they all spend their money on a system of priorities, and they all ask themselves how can I spend money wisely?
If you look at other posts like this, they’ll tell you to, “Spend when there is a sale” or “go to garage sales and stretch your money.” That’s BULL! No one wants to hear that crap anymore and it’s wrong! When was the last time you saw a billionaire at a garage sale? When was the last time you saw a billionaire only shop in the clearance section? NEVER! Every Billionaire will tell you that they spend their money just like they did when they were broke, they just do it on a much bigger scale now that they are billionaires.
This post, unlike others, will give you actionable and real information on exactly how the rich spend their money and why it works. If you want to be financially wealthy and free, then spend your money like those who are financially free.
System of Priorities
Priority 1: Need to Survive
These are products and services that you need in order to survive. Such as a home, food, a car, and a phone. 100 years ago you could get by without a car and a phone. You could’ve even been rich without a car/transportation and a phone. However, in today’s society it is impossible to make a living without a car/transportation and a cell phone.
However, many people justify needless purchases as necessities. You
Priority 2: Definite Chance of Making Money
After the bare necessities have been met it is time to make your money work for you. A definite chance of making money means if you purchase a product or invest it should make you money 99% of the time. These are things such as a college education in
Priority number 2 in essence, is all about positioning your money in something that will make you money no matter what the market is doing. If there is a crash or if the economy is booming this thing will make you money.
Read More: How to Make Money Rain or Shine
Another concept which has a guaranteed chance to make
Priority 3: Likely Chance of Making Money
Here is where even a large number of smart people tend to trick themselves into buying things they don’t need. Be honest with yourself! If it is a 50-50 chance that something is going to make you money that is not a likely chance. A likely chance is something that will make money the majority of the time.
‘Likely Chance to Make Money’ means it’s not going to make money rain or shine but there is still a high chance of making money. Such as, investing in the S&P 500. On average, for the last 90 years, the S&P 500 has returned 9% annually. However, during the 2008 crash, it dropped by 30%. The stock market as a whole will definitely make money however, it will definitely lose
Priority 4: Low Chance of Making Money
Wealthy people also contribute a large amount of their personal funds into this priority as it has the potential to make them a lot of connections and money. Priority 4 includes things such as networking events and advertising. These things have a low chance of making money and ads have a low chance of making a viewer into a customer. However, it can lead to new connections and new customers that could lead to huge advances in one’s business and financial situation.
Remember to be honest with yourself! Going to a sports event and trying to convince yourself it’s a priority 4 purchase is wrong. Unless you plan on sitting with other influencers and successful people for the sole purpose of networking then a ticket to a super bowl is not a priority 4 purchase.
Priority 5: No Chance of Making Money / Entertainment
When you have completely tapped out the possible purchases for the first 4 priorities you can make a purchase in priority 5. However, it is completely impossible not to find something that you could use available cash to purchase something in the first 4 priorities. Priority 5 things include, going to the movies, purchasing an expensive watch or designer clothing, etc.
However, it is a good idea to take a break every now and then (once a month) by relaxing and purchasing some things you want. A good rule of thumb in purchasing priority 5 products or services is in celebration. After you have accomplished a big goal or made a big deal and you have put the majority of cash into the first 4 priorities, you could put leftover money could go to a priority 5 product or service.
How the Wealthy Use Their Money VS the Poor
The wealthy spend most of their money on priorities one, two, and three. They invest in real estate and stocks. When they get enough capital they also buy businesses and spend money on marketing and promotion. The wealthy also
The poor spend most of their money on priority 5 and what’s left over they put towards priorities 1-4. This is the EXACT wrong way to use you money! They use bad debt to purchase new cars, which they can barely afford. They purchase Gucci belts and expensive watches and after bills, if they can pay bills, they might put a few hundred dollars into investments or self-development. Do not do this! If you watch people who spend their money like this they eventually have to sell everything because they lost their job, plus a recession has started and now they are struggling everyday just to stop from being homeless.
If you spend your money like the wealthy and apply this system of priorities it will put you in a position to free yourself from financial stress. It will free you and your family from wondering how you’re going to survive as prices are increasing and income is at a stand-still. Avoid needless spending, and maximize products and services in priorities 1-4 and you will undoubtedly have a better, happier, and stress-free life.