The Top Common Mistake of the Affluent & the Broke
If we look at two different wealth classes, the affluent & the broke, it would appear that they don’t have much in common. At first glance it would seem that these two groups are polar opposite. One group struggles to get by while the other seems to live in abundance and luxury. Today I want to point out that these groups have 1 major thing in common that make them very alike. The middle ground or the financial playing field of this common ground is what we refer to as the middle class. You see, the broke people who make this mistake stay in the middle class and the affluent who make this mistake stay in the middle class as well. And trust me, the middle class is not a place you want to be. So what is the mistake?
Expansion vs. contraction. The mistake is this: mixing up when on should contract and when one should expand. Think about it like you’re driving a vehicle. You have the gas and the brake. Neither of them are “wrong” options. They both serve a purpose right? However, the misapplication or wrong timing of either of these options could be detrimental. If you’re driving down the highway at 70 mph and randomly slam your break instead of the gas pedal, there is a good chance you’ll be rear ended. Conversely if you’re at a red light at a busy intersection and you hit the gas instead of the brake, there is a good chance you’ll be t-boned. Expansion and contraction are similar. There are exact times when we should expand and if we do anything other than expand, it will result in the demise of our finances. Same thing goes for contraction. So the common problem between the affluent and the broke is that both groups commonly misapply contraction and expansion.
The broke. If you’re broke, read this very closely- You must expand. We have been mis-educated about the importance of budgeting and paying off debt to become financially secure. If you’re broke, the cause of it is that you don’t earn enough income…which by the way, is your responsibility, so don’t act like it’s someone else’s fault. You can make more money and you must. Let’s remove ourselves from the emotional value we place on activities and break it down logically.
Here’s an equation:
– Problem: Bob doesn’t earn enough income and it is causing him to be broke.
-Solution: Bob will solve his problem of not earning enough income by counting where his money went last month and worrying about future purchases.
See how little sense that makes?
Let’s try another!
-Problem: Jill has no money in the bank because she doesn’t make more money than she spends.
-Solution: Jill will solve her problem of not enough income by paying off credit cards.
DUMB. This line of thinking is misinformation at the highest level.
The real solution to being broke is to go make more money. Screw the budget, forget about paying your debts, and go fix the income problem. We can go worry about these things later.
The affluent. The affluent mix these tools up in the exact opposite. They have had a spike in income. The problem with having a spike in income is that it is hard to duplicate. The result of this is that it almost always crashes and the affluent end up with less money than they started with. I see it all the time. Someone has a good month and so they go get a new car. The year went well so Bob and Jill Middleclass go purchase a new home. The problem is that the increase can only be maintained and repeated by repeating the actions that got them there. Let’s try the same exercise with this!
-Problem: Bob had his first $10,000/mo! Bob is excited! Bob wants to do it again because making $10,000/mo is fun.
-Solution: Even though hard work, consistency, and discipline are what caused Bob to have a $10,000/mo, instead of reinforcing those Bob bought a new car hoping that would suffice.
-Problem: Jill has built up a nice reserve account. She wants to keep saving even more money because she realizes how beneficial it is.
-Solution: Even though avoiding large expenses, earning income, and not touching her reserves account for purchases are the exact things that have caused Jill to build up her account, instead Jill buys a condo with the expectation that somehow she will be able to save more money still.
It isn’t even logical. Yet this is what virtually everyone does! Isn’t that crazy?
The solution to being broke is to earn income. The solution to securing affluence is the trim and fat and cut back. Broke people should produce. Affluent people should save and economize. When these are mixed up it causes broke people to stay broke and affluent people to become broke.
I help my clients make money, keep it, and multiply it. This means making the right decisions in the right situations at the right moment. The way I do this is by helping my clients look at where they are now, where they’d like to be, and then identify the exact steps and timelines that must happen in order to achieve their goals and dreams. Click here to watch a free webinar on how to do exactly this!
Own Your Potential,
Jerry Fetta helps his clients make money, keep it, and multiply it.
He believes everyone should own their potential. He believes you were not created to spend 40+ hours per week serving the 40-year-to-life sentence trading your precious time for money just to live in mediocrity.
However, the truth is that time and money must be exchanged. It just doesn’t need to be you making the exchange.
Jerry helps his clients create wealth that exchanges time and money on their behalf.
His clients see a 30% increase in income, a guaranteed increase in savings rate, and 8-12% fixed annual returns on their assets in the 1st 90 days of working with him.
To get started, go to www.WealthDynamX.com/potential