What is the Difference Between Rich and Poor People?

Difference Between Rich and Poor People

Since the beginning of the world, the human population has been divided into people who possess things and those who don't.

I'm sure that many of you have pondered on this unfair situation. You’ve probably asked why some people always seem to succeed in life while others spend a lifetime chasing their fortune.

Well, today I’m going to talk about this interesting subject and explain what the difference between rich and poor people is. And if there is a secret to success that is known only to those fortunate ones.

Keep on reading if you want to find how to get rich and stay rich.

Which people are poor?

Let's imagine a scenario. Your monthly expenses are $1000. In the worst case scenario, the money you earn each month won’t be enough to cover your expenses.

That means that you’d be accumulating debt because you can’t pay your bills with your salary. Or that you’ll have to compromise between having enough to eat and paying your rent. You’d be poor and wondering how to make ends meet.

I call it the worst case scenario because once you start living in debt, it grows faster than you can imagine. To dig yourself out of the debt hole, you’d have to learn how to manage your budget so that you don’t have to use credit cards or bank loans.

A slightly better scenario is that in which you earn as much as you need to cover your expenses. For example, if you make $1500 a month, your expenses would also be $1500 - no more, no less.

The good thing about this situation is that you’re not accumulating debt. The bad one is that you don’t have money for any emergency situations or for leisure activities like going on a holiday. In other words, you’re making ends meet, but just barely.

A lot of people fall into these two “group,” and both struggle to make a living and they might be wondering how to get a good salary.

However, we also have another class of people. I’m talking about those who earn more than they spend, but they don’t make enough to call them rich.

For example, you earn $1500 and your expenses each month are $1200. This means that you have $300 that you can spend or save. That’s what we call the middle class.

They are those aspiring to get rich, but unfortunately, a few of them succeed because they don’t know how to play the game of money.

Why middle-class people stay “poor?”

Let’s say that you’ve managed to save some money at the end of the year. What would you do? You buy something, usually a car, a computer, or a phone. And here is where you make a mistake that costs you the chance to get rich.

The car or the laptop is something that will lose value over time. It depreciates. If you buy the car for a $10,000, you’ll sell it a few years later for half the price or even less.

Not to mention that you’d probably have to have it repaired at some point and that the price of fuel is constantly increasing.

So, you’re getting something that will cost you more in the future. It’s not making money for you, it’s going to cost you more in the future. That’s called liability.

Other material things like phones and computers also lose value because new and better models appear every year. So, they are not worth investing in.

Why rich people stay rich?

It goes without saying that rich people make more money than they spend. However, as you start to understand the trick is not just making more money that you need. So, why these people continue to grow rich while it takes poor people ages to save money?

Rich people make their money work for them, while poor people work to make money. When you think about it, it’s a big difference, right?

Rich people buy assets, whose value is not going to depreciate in the future, but will likely increase. Take for example the stock market and real estate. They are the classic investment strategy. You put some money in real estate, and in a year, you might double or triple your stake.

Let’s say that you’ve saved some money and you buy an asset with them. Besides your salary, you’ll be getting money from the asset. In time, you’ll accumulate more money, which will allow you to buy more assets and they will bring you even more money.

Of course, the price of your asset might suddenly drop. So, In the game of money, it’s also important that you know how to invest properly so that you don’t lose all your asset at once. You shouldn’t also put all your eggs in one basket, as people often say.

Another difference between rich and poor people is how they think and plan for the future.

Poor people are less likely to take risks and grab the opportunity because they are uncertain about the future. They also don’t feel ready to face challenges and obstacles seem too great for them. That’s why they give up before they even start doing something.

Instead of investing in themselves and trying to improve their situation, a lot of poor people blame others for their misfortune – the government, the financial crises, their boss, and so on. That’s a waste of time because

Unfortunately, poor people want to get rich, but they don’t know how. That’s why you might see them buying lottery tickets and hoping for a lucky strike.

Rich people, on the other hand, know what they want. But more importantly, they know how they are going to do it. They have a strategy, and they are willing to overcome any obstacles they face. They don’t look at other people to blame for their mistakes, and they are ready to work hard to achieve their goals.

How to get rich?

So, the formula for getting rich and staying rich is a simple one:

  • Make more money than you spend.
  • Save enough money to buy assets.
  • Continue to buy more assets as you get richer.
  • Watch as your fortune grows.

You can’t help it if you’re not born with a silver spoon. However, no matter what others might try to tell you, you don’t have to stay poor all your life. If you work hard and you commit to your goals, it’s possible to achieve anything.

What do you think about this topic? What is the №1 different between the rich and the poor according to you? Share your thoughts in the comments.

(Last Updated On: January 22, 2019)
About the author

    Whale Sumo

    Hwang is a self-proclaimed nerd who loves helping people understand complex concepts. He has a passion for crypto and online privacy and enjoys teaching others about the benefits of both. Hwang is an advocate for individual freedom and believes that knowledge is power. When he's not busy sharing his knowledge with the world, Hwang can be found running full marathons or playing video games.