How to Create Wealth

Copyright 2006 Timothy Rohrer Most people say you need money to make money. In reality, it is not about how much money you have, but how you spend the money that matters. There is a distinct difference in how the wealthy, the middle class and the poor spend their paycheck. Generating wealth is a mechanical process believe it or not. People tend to take the whole concept of wealth and spin it into this complex formula that requires hard physical labor or long hours behind a desk. The truth is that the formula to create wealth is so simple it's almost unbelievable. Before we begin, it's important that we understand the correct definition for the words liability and asset. A liability is something that we pay perhaps on a weekly basis, a monthly basis or even annually, such as cars, boats, and houses. Yes, a house is considered a liability because it is a monthly bill. Assets are things that pay us money. Some examples of assets are: stocks, bonds and rental properties. Please keep in mind that a house or rental property is only an asset when it begins paying you. Each week the wealthy, the middle class and the poor receive a paycheck. How we spend our money determines our success in life. The poor spend their paychecks on rent, taxes, food, clothes, and other miscellaneous objects that end up sitting around collecting dust. The middle class spend their paycheck on house mortgages, boat's, cars, snowmobiles or anything that has a monthly payment attached to it. Ultimately the middle class end up acquiring so much debt they begin paying off one credit card with another, before they know it they are looking into debt consolidation, then to refinance their home and eventually bankruptcy if they are not careful. Sound familiar? The wealthy take their paycheck and spend their money on investment vehicles. The first thing that comes to most people's minds when they think of investment vehicles are stocks and bonds. However, an investment vehicle is simply a method of transportation to get from point A to B financially. It does not matter if you are driving a Dodge or a Mercedes, all that matters is that you are able to get from point A to B. For example, John may choose to invest into the real estate market while Susan decides to begin a business venture with a close friend from college. While both John and Susan are using different investment vehicles, they are both trying to get to point B. The truth is you do not need thousands upon thousands of dollars to begin making money. All you need is a few investment vehicles that offer the right opportunity. The only challenging part is finding the right ones that work for you.