The «poor», the “middle” and the “rich” spending habits!

For the last couple of years I have become extremely observant of how I spend my money and I have also paid attention to how other people spend their money. As time went by, I picked up three different ways we spend our money. One could categories them in a poor kind of situation, a middleclass situation and a rich man’s situation. I want to write about this because it is interesting to see how different we are, even if we get the same opportunities. Enjoy the reading!

THE POOR MAN

Vel, I called him poor just to get a distinction between the different categories. A man is not poor just because he has little money but the man with little money do most likely have some habits that will distinguish him from the rest of the crowd. You know, as I have been with poor friends, I have seen that they spend every penny on different things that do not give them anything else than short-term pleasure, which I think is risky. They spend money on cigarettes, alcohol, and other things that the rich are getting insanely rich on. It is not a good balance. They only spend money on liabilities and are just rolling their eyes when I talk to them about assets and how you should save money. What the f*** is an asset? - they often ask me. Ok, I know that we have different interests but come on, do you not want to buy anything whenever you want without even thinking about what you have left on your banking account?! One time a “poor” friend told me this; “I would do anything if it led to doing nothing” … now that is a moral that lacks ambitions. Anyways, their cash flow is limited to income and expenses. They often have a job that pays little to nothing, but they are fine with that (which is totally fine by me). Their income often pays for expenses like rent, food, transportation, clothes and of course taxes. They earn, they spend month by month and are not putting anything towards assets or savings accounts. Hence, they stay poor.

THE “MIDDLEMAN” AKA MIDDLE CLASS

These individuals take on more debt as soon as they become successful in what they are doing. Their spending just follows their income no matter how large the monthly payment becomes! No joke, I see my friends that are having success in the business life buying bigger and bigger houses, cooler and cooler cars, travels more and more and just keep on spending because they can, and they like to show of. You know a raise in salary qualifies them to borrow more money which they then can put towards those newer cars and bigger houses. Their salary comes in and are then being used on expenses and to paying of the huge debt with great interests. Again, as their salary increase so does their debt, thus more expenses each month. It is like it is an “evil circle” that traps the middleman into an “income-expense spiral” that never leave until you turn the age of 70. Many of us tend to show of how wealthy we are when the truth is something else. I do not think that the middle class think that much about how compound interest works in practice. They know that if they save some and spend some, they will turn out break even at the end of the month and that is just fine. If more of the middlemen where thinking like the rich, over time, they too will become rich.

THE RICH MAN

The poor- and the middleman most likely have liabilities that take money from them while the rich often have assets that gives them money. They have, in a sense, gained control over their expenses and are focusing on one thing that they know can earn them some decent amounts over time and that is “building a shitload of assets that generate them passive income”. They often build up a business so that most of their expenses they have are being paid by the business. They do not have any liabilities and if they have other people are most likely paying for them (rent, dividend etc.). When the rich man receives their payments they put it into work immediately, they are not spending a dime on unnecessary products and health crackers that can ruin their life. Instead, they are “shooting” the money into something that can calm them down and keep them safe now and for the future, thus protecting themselves and their family’s wealth forever. With the growing income producing assets and no consumer debt their money just keeps working for them. In my opinion that is what one should aim for when you only live once!

Where are you in terms of spending, if you were to be honest?

The answers to the above question have always been interesting to me.

Cheers
-Olebulls

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