Two Ways to Get Wealthy

Here are two different ways that you can get rich. At first glance they look very similar, but understanding the difference between them can make an enormous difference in both the quality of life that you enjoy and the amount of wealth you accumulate.

There are many different ways to get rich. The reason that I am focusing on these two particular methods is that they can be successfully applied whether you are an employee, self employed or a business owner.

The first method is to spend less than you earn and then put the excess to work making money for you. The second method is to earn more than you spend and then put the excess to work making money for you. Do you see and understand the difference between these two methods?

Each of these methods has two parts and in both methods the second part is the same. However the first part is vastly different.

The first part of method 1 is to spend less than you earn. What you are doing in this method is to become skilled at budgeting. (For some great tips on budgeting without losing quality of life see my article "How to Invest 25% Of Your Income Without Losing Your Quality of Life")

Budgeting is a sensible thing to do but it has its limitations. The maximum amount of money that you can free up for investing is 100% of your current income and to do that you would have to find some way to live for free, a difficult challenge indeed.

If you are putting your main focus on budgeting then you will find that as your budget gets tougher and tougher your mental focus turns to what you can do without. In other words your focus is on lack or shortage whereas in order to get rich you need to develop abundance thinking. Too much emphasis on budgeting can create a mindset that makes wealth acquisition difficult.

The second way to get rich is very different. Earn more than you spend and then put the excess to work making money for you. With this method your focus is on increasing your earnings.

Creating a pool of potential investment money by increasing your income doesn't have the limitation we discussed above in regards to creating potential investment money by budgeting. There are people who earn double what you earn. There are people who earn ten times what you earn. There are even people who earn one hundred times what you earn. The potential for earning is open ended.

It is important here to note that in the method of earning more than you spend the "you spend" part should ideally remain constant. In other words don't fall into the trap of increasing your spending as fast as you are increasing your earning. If you think it is good psychology to reward yourself immediately for your increased earning then put 10% to 20% of your net increase toward your immediate lifestyle and the other 80% to 90% toward your investing.

I said earlier that the budgeting approach could lead to developing a poverty or lack mind set. The increased earning approach does not have this downfall. When your focus is on increasing your earnings you are developing an abundance mind set which is exactly the mind set that you want if becoming rich is your goal.

You may be wondering how you are going to achieve this increase in income. You can increase your income by combining two strategies.

The first of these two strategies is to make yourself more valuable.

If you are an employee then you need to make yourself more valuable to your employer by ensuring that what you do in your job and the way that you do it improves your employer's chance for gain.

In a small business your employer is probably the owner and the gain that they are interested in is bottom line profit. In a large corporation your employer is probably a manager who is also an employee. The gain they are interested in is probably a promotion up the corporate ladder.

If you are self employed or in business then you need to make yourself, your products and your services more valuable to your marketplace. By more valuable I don't mean that you discount your price. On the contrary, I am talking about improving your products, services, and customer service to the extent that you can increase your price faster than you increase your costs so that your percentage profit is increasing as well as your net dollar profit.

The second of the two strategies for increasing your income is to develop effective skills and effective habits for marketing your increased value.

For an employee it is important to accept the truth that you can be the best employee in the world but if no-one notices then you are unlikely to get a pay rise. See yourself as a product that needs to be well marketed and start studying how to achieve this goal in the most effective manner.

If you are self employed or in business then you need to market your products or service in such a way that the marketplace becomes aware of this extra value that you have developed and the benefit that your extra value will give them. Your marketing needs to make these extra benefits so enticing that people will be happy to pay in order to receive them.

Whether you are an employee or in business the combination of increasing your value and improving your marketing will lead to increased income.

In Conclusion

We looked at two different methods to get rich.

The first focused on reduced spending and investing the overage whereas the second focused on increased income, while maintaining your level of spending, and then investing the overage. We concluded that the second method has greater potential both from a financial and psychological perspective.


James Delrojo would like to help you by giving you his
ebook "Unleash the Success Power of Your Mind"
(valued at $27) completely FREE.
Go to http://www.YourSuccessMind.com

This article is free for republishing
Source: http://www.articlealley.com/article_132722_63.html