What is net worth? and Why rich people focus on it?

Hello friends, in today’s article, we see what is net worth, and how rich people focus on it? from the book ” the secrets of the millionaire mind by T Harv Eker. Wealth file #13 is all about the difference between rich and poor people on their focus of net worth and working income respectively.

so let’s see the difference and avoid the bad one to get wealthy.

previous Chapter 12

Wealth file #13:-What is net worth?

Rich people focus on their net worth.

Poor people focus on their working income.

In this wealth file #13, the author explains the difference between focusing on net worth and working income.

the author says, ” When it comes to money, people in our society typically ask, ” How much do you make?” seldom do you hear the question ” what is your net worth?” few this talk this way except of course at the country club.

In-country club, the financial discussion almost always centers around the net worth; ” Jim just sold his stock options; his worth over three million. Pauls’s company just went public; here worth over eight million. she just sold her business, she’s now worth twelve million.”

In-country club, you’re not going to hear, ” Hey, did you hear that joe got a raise? yeah, and a two percent cost- of living allowance to bout? if you did hear that you’d know you are listening to a guest for the day.”

you only hear that near to the middle-class and poor people.

then the author gives the wealth principle, i.e. b the true measure, of wealth is net worth, not working income

the author says, ” Always has been, always will be, net worth is the financial value of everything you own. to determine your net worth. add up the value of everything you own, including your cash ad investment such as stocks, bonds, real estate, the current value of your business if you own one the value of your resistance. if you own it and then subtract everything you owe. net worth is the ultimate measure of wealth because, if necessary, what you own can eventually be liquidated into cash.

Rich people understand the huge distinction between working income and net worth. working income is important. but it is only one of the four factors that determine your net worth.”

then the author gives the four factors of determining net worth, guys, believe me, they seem to be simple, but actually, they are not easy. very hard.

let’s see what are they?

The four network factors are:-

1) Income

2) Savings

3) Investments

4) simplification

then author explain about them,

the author says, ” Rich people understand that building high net worth is an equation that continues all four elements, Because all of these factors are essential, let’s examine each one by one

Income comes in two forms; Working income and Passive income

working income is the money earned from active work, this includes as a paycheck from day-to-day jobs, or for an entrepreneur, the profits or income taken from a business.

Working in business requires that you are investing your own time and labor to earn money. Working income is important because, without it, it is almost impossible to address the other three net worth factors.

Working income is how we fill up our financial ” funnel” so to speak, all things being equal the more valuable as a part of the entire net worth equation. although working income is critical, again it is only valuable as a part of the entire net worth equation.

unfortunately, poor and many middle-class people focus exclusively on working income, out of the four factors, consequently then end up with a low or no net worth.

Passive income is money earned without you actively working. it is another stream of income filing up the funnel, which can then be used for spending saving and investing. ( income comes from stocks, bonds, real estate in form of dividends, interest, and rent, Restpectecly.

Savings,  is also imperative you earn wads of money, but if you don’t keep any of it, you will never create wealth. Many people have a financial blueprint that is wired for spending. whatever money they have, they spend.

they choose immediate gratification over long-term balance. Spenders have three motoes.”

then the author talks about the poor and middle-class people’s mottoes on spending, try to correlate yourself.

the author says, ” their first motto is ” It’s only money, therefore the money is something they don’t have much of their second motto is ” What goes around, comes around.”

at least they hope so because their third motto is ” sorry, I can’t right now, I’m broke.”

Without creating income to fill the funnel and savings to keep it there, it is impossible to address the next net worth factor.

Once you’re begun saving a decent portion of your income, then you can move to the next stage and make your money grow through investing.

Generally, the better you are at investing, the faster your money will grow and generate a greater net worth.

Rich people take the time and energy to learn about investing and investments. they pride themselves on being excellent investors or at least hiring excellent investors to invest for them.

Poor people think investing is only for rich people so they never learn about it and stay broke. Again, every part of the equation is important.

Our fourth net worth factor may well be the  ” Darkhorse ” of the bunch because few people recognize its importance in creating wealth. this is a factor of ” simplification”.

It goes hand in hand with saving money, wheres you consciously create a lifestyle in which you need less money to live on, by decreasing your cost of living, you increase your savings and the number of funds available for investors.

To illustrate the power of simplification, here’s the story of one of our millionaire mind (program) participants.”

then the author gives the example of simplification, hope you relate this example with our life.

the author says, ‘ when she was only twenty-three she made a wise choice; she purchased a home. She paid just under $300,000 at the time. sever years later, in a sizzling hot market sue sold her home for over $600,000 meaning she profited over $300,000.

She considered buying a new home, but after attending the millionaire mind (program) intensive seminar, she recognized that if she invested her money in a secure send mortgage at 10% interest and simplified her lifestyle, she could actually be quite comfortable living on earnings.

form her investments and not have to work ever again. instead of purchasing a new home, she moved in with her sister, now at thirty years of age, she is financially free.

She won her independence not through earning a ton of money, but by consciously scaling back her personal overhead. Yes, she still works- because she enjoys it but she doesn’t have to.

in fact, she only works six months, of the year, the rest of the time she spends in Fiji, it first, because she lives with the locals rather than the tourists, she doesn’t spend a lot.

how many people do you know who would love to spend six months of each year living on a tropical island, never having to work again, at the ripe old age of thirty? how about forty? fifty? sixty? ever? it’s all because, she created a simple lifestyle and consequently, doesn’t need the fortune to live on.

So what will it take for you to be happy financially if you need to live in a mansion, have three vacation homes, own ten cars, take annual trips around the world, eat carrier and drink the finest champagne to enjoy your life, that’s fine, but recognize you’re setting your bar pretty dam high. and it may take you a long, long time to get to a point where you’re happy.

on the other hand, if you don’t need all the “toys” to be happy, you will probably reach your financial goal a lot sooner Again, building your net worth, is a four-part equation.”

On the above discussion, I remember the Will Smith(actor) quote, he says, ” Too many people spend money they haven’t earned. to buy things they don’t want, to impress people they don’t like.”

then the author talks about how rich people play their financial goal, and how poor and middle-class play their financial goals.

the author says, ” As an analogy, imagine driving a bus with four wheels, what would the ride be like if you were driving on one wheel only?

Probably slow, bumpy, full of struggle, sparks, and going in a circle. Does that sound familiar?

rich people play the money game on all four wheels, that is why their ride is fast, smooth, direct, and relatively easy. by the way, I use the analogy of a bus because once you are successful, your goal might be to bring others along on the ride with you.

Poor and most middle-class people play the money game on one wheel only. they believe that the only way to get rich is to earn a lot of money.

they believe that the only because they’re never been there. they don’t understand Parkinson’s’ law, Which states, “ expenses will always rise in direct proportion to income.”

Here’s what’s normal in our society. you have a car, you make more money, and you get a better car. you have a house, you make more money, and you get a bigger house.

You have clothes, you make more money and you spend more on holidays. of course, there are a few exceptions to this rule… very few!. In general, as income goes up, expenses almost invariably go up too that’s why income alone never creates wealth.

this book is called secrets of the millionaire mind, does a millionaire fere to income or net worth.

Net worth, therefore, if your intention is to be a millionaire or more, you must focus on building your net worth, which as we’ve discussed is based on much m, more than just your income.”

then, the author gives the plan to build your net worth. so, guys, I do this activity, that’s really helpful to clear your financial goal.

the author says, ” take a blank sheet of paper (or open notepad in mobile) and tide it ” Net Worth”

then create a simple chart that begins with zero and ends with whatever your net worth objective is. note your current net worth as it is today. then every ninety days, enter your new net worth. that’s it?

If you do this you will find yourself getting richer and richer. why? because you will be ” tracking your net worth”

Remember; what you focus on expands. as I often say in our training ” where attention goes, energy flows and results show.

by tracking your worth, you are focusing on it and because what you focus on expands, your net worth will expand. by the way, this law goes for every part of your life; what you track increases.

to that end, I encourage you to find and work with a good financial planner. these professionals can help you track and build your net worth. they will assist you in organizing your finance and introduce you to a variety of vehicles for saving and growing your money.”

then the author gives the millionaire mind actions, you can read this in the book, buy this book in following image link.

so this is all about the wealth file # 13 on What is the net worth, and how rich and poor people think about it.

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