What would you do if you had $1 million in a trust fund that you just received? Would you think, "Wow, that's an incredible amount of money and I could do so much good with that?" If that's the case, you might have a rich mindset. If you think to yourself, "How could I invest that to generate funds that I could live on?" Then you would have a wealthy mindset. The difference between the two is that rich think about spending principal, the wealthy think about investing principal so it will work for them. I'm going to show you how you can capture that same mindset yourself.
Here are four ways that you can plan to be wealthy.
The first is on maximizing cash flow. The fact of the matter is, retirement, down payments for home, assets, cars, whatever it is, depends on whether or not you have cash flow. If you don't have cash flow then we don't have to worry about anything else. Your focus has to be on maximizing your cash flow. Second thing is use your cash flow to pay off debt. Why is that? Because the average credit card bill could be 20%, 25%, 35%. There is no investment that's going to give you consistently 35% a year. The best investment you can do is to pay off those credit cards. Why? Because it's a negative interest rate. You're paying someone else 35% instead of earning it yourself.
The next thing is focus on accumulating principal, and always think about the most effective ways to make your principal work for you. How do you invest it to generate the greatest return in the most responsible way possible? Never spend your principal. Always focus on the return, the income that it generates. Because if you have $1 million and that's earning you 5%, that's going to generate $50,000 a year. If you can live on that, you will have that $50,000 for every year of your life. By taking these four simple steps you can ensure that you develop a wealthy mindset over a rich mindset. Because the wealthy find ways to make their money work for them, and the rich spend principal and then have to work for their money.
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