Aren’t you curious why the rich keep getting richer and the middle and lower class keep getting poorer? It’s no secret there’s a huge wealth divide in America. However, millions of people are educating themselves on wealth-building to escape the wealth divide and achieve financial freedom. So, here are ten wealth secrets the government doesn’t want you to know that you can start implementing today.
#1 Aim to Have Assets, Not a Job
The rich don’t become wealthy by having a job where they work their way up the corporate ladder. In fact, the rich are actually unemployed. How is this possible? They own assets such as real estate, businesses, and investments that produce consistent cash flow, allowing them to make money without trading their time for it. For example, a wealthy person might buy a business. That business puts money in the rich person’s pocket without physically working for that money.
My suggestion would be to research how you can purchase assets to provide consistent cash flow so that you can eventually quit your 9-5.
#2 Anybody Can Legally Reduce Their Taxes
Many people like to say, “Tax the Rich,” but they don’t understand that the rich know how to legally reduce their taxes. For example, owning assets gives you tax breaks that the poor and middle class are unaware of. An example would be owning real estate investment properties. The rich can’t write off the entire property. Still, they can write off mortgage interest, property tax, property management, repairs, and depreciation. Because the poor and middle class do not have this financial knowledge, they don’t get the tax benefit. However, anyone can learn the tax code and reduce taxes simply through self-education.
#3 Owning Real Estate is the Key to True Wealth
Real estate increases in value year after year, especially during inflation. Currently, in the economy, housing prices have skyrocketed. The higher prices are hurting the poor and middle class. However, the rich love the higher prices because they make more money on their investment properties. For example, owning a rental property that goes up in value means the rent goes up. So, for each rental property a rich person owns, the rental income goes up, bringing in more money for them.
#4 Use Debt to Achieve Wealth
One of the most powerful wealth secrets is using debt to make money. In the book Rich Dad, Poor Dad, Robert Kiyosaki talks about how the rich never spend their own money. They use other people’s money, or OPM, to purchase assets. For example, rich people use other people’s money to buy investment properties. They do this by raising capital, or cash, through hard and private money lenders, FHA loans, and peer-to-peer loans.
#5 Pay Yourself First
To secure your long-term financial future, you must pay yourself first. Paying yourself first involves setting money aside each month for savings or investments. Instead of paying yourself by putting the money in your spending account, you’re putting that money away to build your net worth. Paying yourself first removes the temptation of using that money to spend, forcing you to rely on discipline instead of immediate gratification.
#6 Investing and Compound Are Powerful Wealth-Building Tools
Wealthy people heavily rely on their investments to build generational wealth. They commonly invest in long-term accounts such as index funds and Roth IRAs. Investing in these investments is an excellent investing strategy because they are passive and grow slowly over time, mitigating risk. Index funds track the returns of a market index, such as the S&P 500 or the Dow Jones. A Roth IRA is a retirement investment account where you can contribute up to $6,000 after-tax dollars that grow tax-free. So, when you’re allowed to take the money out at 59 1/2, you won’t be taxed on it.
#7 Continuously Study Financial Literacy
The key to building and maintaining wealth is understanding how money works. You always want to be studying financial and economic concepts. For example, Warren Buffett spends around 80% of his day reading newspapers, books, and online articles. Reading a lot is what differentiates the rich from everyone else. They keep their brains active by constantly learning and exercising their brains, allowing them to continue building wealth.
#8 Making Mistakes is a Good Thing
During our education years, we are constantly told to avoid mistakes, or we’ll get punished. However, humans learn by making mistakes. Mistakes teach us what works and doesn’t work, allowing us to improve our processes. We are taught that failure is bad and decreases our worth. However, failure is a tool that teaches us how to push through setbacks and figure out better ways of doing things.