Cash Flow of the Wealthy

The Small Investor

 Growing wealthy is actually quite simple.  While a high income can certainly help one become wealthy faster, most people with high incomes are still a paycheck away from missing their house payment.  When a job is lost, suddenly people are digging into their 401k’s and IRAs – their only real savings – losing millions of dollars in retirement by raiding their tax deferred savings to meet expenses.  The difference between a person who will become wealthy and the average person (the broke person) lies not in the income but in the cash flow – what each person does with hismoney.

 Below is the cash flow diagram for the “normal” person – one who will never become rich.  Income comes into the bank account in the form of a salary.  This could be a very large salary or an average to small salary – it really doesn’t matter.  The entire salary only pauses in the bank account, soon being…

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