Why can't we be wealthy even with high income? What is the idea for getting true wealth?
Many people want to be richer, and some cite high income as the first condition for their work, but 'being wealthy' and 'being high income' are similar. It's not synonymous, says
Purchase Cash Flow to Grow Wealth | Stop Buying StuffThe MDpreneur
https://themdpreneur.com/purchase-future-cash-stop-buying-more-stuff/
Pull the expenditure from the resulting revenue the flow of funds remaining on hand cash flow is called but, The MDpreneur that it is important 'to increase the future cash flow' in order to become wealthy was explained.
Cash flow is essential for life, but the method of selling your time to generate cash flow does not generate wealth even if you can generate cash. Although there are so-called 'stable occupations', cash flow stops when you are unable to work due to injury or dismissal. For this reason, in times of economic uncertainty, it is important to first diversify the cash flow of income, The MDpreneur wrote.
If you sell your time and get cash, you will have a cycle of 'working to buy things.' With this method, people become slaves to their salaries and employers.
'Cash' and 'wealth', and 'high income' and 'wealth' are different. Cash is the transfer of wealth, and the cash flow cycle shows how cash goes in and out. Wealth does not generate a cash flow cycle, but only by manipulating the cash flow cycle.
This 'operation' means 'increasing future cash flow.' When you buy something, you will have to pay in the future, but when you buy cash flow, over time your entire income will be replaced by the cash flow you purchased.
The MDpreneur uses two people, A and B, as an example to give an example of buying future cash flow.
Both A and B are doctors and have an annual income of 20 million yen. A has a normal life with friends drinking beer in the yard and watching football as a hobby. B, on the other hand, loves luxury, routinely drinking cocktails at the hotel bar and sometimes heading to Monaco for gambling.
◆ Life of A
A remembered the words from his father, 'To make real wealth, you have many sources of income.' A lives a modest life, leaves some money out of his salary, and buys future cash flow rather than buying a lot of things.
The following items were purchased by A in the year when he earned a high income.
1: Website construction / 300,000 yen
On the website, A answers some questions from users and posts articles he wrote. By sending users to the online course through the article, A earned 20,000 yen a month. The website has also become a training ground for A to build a career.
2: Used vending machine / 500,000 yen
A hired a person to refill the vending machine with goods. Even without this labor cost, A earned 25,000 yen a month.
3: Seaside house / down payment 2.5 million yen and mortgage
A used this house only twice a year and rented the rest to others. A paid the rental service operator for management and reservation, but even without the loan payment and other expenses, he got 55,000 yen a month.
4: Defined contribution pension and personal retirement pension account for old age
The United States has tax incentives for individual pension plans, and there are also systems that exempt benefits after retirement. A has set the maximum amount available for defined contribution pension and personal retirement pension accounts.
To summarize the above, A costs 3.3 million yen and purchases a monthly cash flow of 100,000 yen from the following year. The rate of return is 100,000 yen x 12 months ÷ 3.3 million yen, which is 36%. With the income generated, A will pay off his first cash investment in three years. And the villa becomes an asset building, and when you sell it, it becomes cash.
If you continue the above for 10 years, you will have a total income of 12 million yen. It takes several hours a week to get these money. A has a high income, enjoys an above average lifestyle, and lives a life that he doesn't want to overdo. In addition, you can quit your job and live on the income you earn from your investment.
◆ B's life
On the other hand, what B bought in the first year of high income is as follows.
1: BMW / month 50,000 yen
2: 50,000 yen a month including boat / maintenance
A boat that is used only on summer weekends every year. Friends are happy that B has a boat, but they don't pay for maintenance.
3: Approximately 460 square meters of house / 5 million yen down payment and 300,000 yen monthly mortgage
B bought a big house because he likes to have parties. Many people are delighted to come to this house party.
4: Defined contribution pension and personal retirement pension account for old age
This is the same one used by A. As with A, we set it to the maximum amount available.
Depending on what B purchased, you will be required to pay 400,000 yen a month from the following year. Luxury-minded B continued to do the same luxury after that, so monthly payments were even higher. B continues to save for old age and wants to retire in 30 years, but he can't 'quit his job right now' despite his dislike of work.
When comparing A and B, it can be said that A is 'wealthy' and B is not wealthy but just 'high income'. This difference comes from, as it was at the beginning, 'Are you buying future cash flow?' A bought future cash flows, while B bought future debt payments.
And many follow the same path as B, even if they aren't upscale.
When buying future debt, one becomes poor, and when buying future cash flow, one becomes wealthy. Stop buying a lot and prevent 'holes that create outflows' in your cash flow. And The MDpreneur advised to reverse the flow and make a decision to increase cash flow in the future.
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in Note, Posted by darkhorse_log