{"id":27433,"date":"2017-07-24T19:51:30","date_gmt":"2017-07-24T23:51:30","guid":{"rendered":"http:\/\/www.andysowards.com\/blog\/?p=27433"},"modified":"2023-03-07T14:46:59","modified_gmt":"2023-03-07T18:46:59","slug":"how-the-rich-spend-their-money","status":"publish","type":"post","link":"https:\/\/www.andysowards.com\/blog\/2017\/how-the-rich-spend-their-money\/","title":{"rendered":"Want To Be Rich? Here\u2019s How To Spend Your Money!"},"content":{"rendered":"

Once you\u2019re rich, you\u2019re all set – right?<\/p>\n

Well, maybe not. We\u2019ve all seen news stories about lottery winners and pro athletes who struck it right, only to find themselves broke again a short time later. So it seems that no matter how much money you have, you\u2019ll run out eventually.<\/p>\n

Only that isn\u2019t true either, because we know that plenty of rich people stay rich all their lives – and plenty of rich families stay rich for generations. Sometimes these people have a great deal more money than athletes and lottery winners, but not always: sometimes they\u2019re just managing it properly. How are they doing it? What do rich people do with their money that makes it last so long, and can we learn to do the same?<\/p>\n

Don\u2019t spend it – save it<\/h3>\n

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\n5 Tools Designed to Make Your Money Work for You<\/em><\/p>\n

Okay, so this is an obvious tip. It\u2019s always a good idea to save money rather than spend it. But don\u2019t underestimate how serious many rich people are about this idea. Plenty of rich folks are also notorious cheapskates!<\/p>\n

This isn\u2019t to say you should be cheap and miserly, but remember that living within your means is the key to long-term wealth. Even when you see rich people spend, you\u2019re only seeing them spend a portion of their net worth. If a person making $400,000 a year spends $400 on a single meal, that may seem absurdly extravagant – but remember that that\u2019s the equivalent of a person earning $40,000 a year spending $40! If you cook at home instead, you\u2019ll save money. And if you follow the rest of our tips, maybe it will be you spending $400 on a meal someday in the future – when you can afford it, thanks to the decisions you made early on.<\/p>\n

Invest it<\/h3>\n

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\nWhy Entrepreneurs Need A Special Kind Of Approach To Investing<\/em><\/p>\n

So what do you do with the money you\u2019ve saved? Simple: you invest it.<\/p>\n

Rich folks stay rich (and keep growing richer) in a large part because they\u2019re the ones investing the most money. With investment, you put money into other people\u2019s companies – and reap the benefits of their labor.<\/p>\n

Investment is the most important method for growing richer because it takes advantage of the most powerful tool in economics: compounding interest. If you earn $40,000 a year, you\u2019ll have earned $80,000 in two years and $120,000 in three years. The graph of your earnings would be a straight line, going up. Pretty good!<\/p>\n

If you invest some of that money, you can make it earn more money. And thanks to compounding interest, the graph won\u2019t be straight anymore – it will start angling up and up, earning you more and more as time passes. It works like this: invest some amount (let\u2019s say $100), earn interest (let\u2019s say it\u2019s a great year, and you make $10). If you get the same percentage of interest next year, you\u2019ll now earn more<\/em> than $10 – because instead of 10% of $100, you\u2019ll be getting 10% of $110 (which is $11, of course). Let this work for a while and pretty soon your interest is worth a ton of money each year, all without you touching the money or lifting a finger at work.<\/p>\n