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| The Passive Incomes of The Rich Are Many Times Their Lifestyle Costs |
Based on financial means
and status, people can be classified into active income dependent, those who
have earned financial freedom and the
rich. If we observe carefully we can discern that the passive income streams of
these three categories vastly differ. This short post, a slide literally,
examines how the residual
incomes of the three compare and provides insights and links to profound
concepts like what is
passive income, what
is financial freedom and how to become rich. You will find tight correlation between
ideas discussed here and those found in Robert Kiyosaki’s most popular and
classic work, “Rich Dad
Poor Dad”.
How the Incomes Compare
How the Annual Incomes of the Three Categories
of Citizens Compare
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Passive
Incomes
|
Active Income Dependent ($)
|
Financially Free ($)
|
The Rich ($)
|
Interest
|
100
|
24,000
|
4,000
|
Dividends
|
-
|
58,000
|
10,00,000
|
Royalty
|
-
|
3,500
|
-
|
Rent
|
6,600
|
-
|
2,00,000
|
Sum of
streams of passive income
|
6,700
|
85,500
|
12,04,000
|
Active,
Occupational Income
|
48,000
|
18,000
|
6,00,000
|
Total
Income
|
54,700
|
1,03,500
|
18,04,000
|
Present
Lifestyle Expenses
|
54,000
|
78,000
|
3,00,000
|
Surplus
|
700
|
25,500
|
15,04,000
|
Investment
for generation of passive incomes in future
|
-
|
23,000
|
14,00,000
|
Surplus
Income lying in savings account in bank yielding low interest
|
700
|
2,500
|
1,04,000
|
Following conclusions can be drawn from a study of the above table:
- Active, Occupational Income: The active income of the wage earners (not financially free yet) is almost the main and only source of income. For the financially free individuals the active income constitutes a small portion of the total income. The richest individuals inspite of their riches often have large active incomes; they are not lazy.
- Passive Income: Passive Income of the regular wage earner is miniscule. The financially free enjoy significant passive income, that slightly exceeds their present lifestyle expenses. The rich have huge passive income streams that far exceed their lifestyle expenses.
- Surplus and Investment of Surplus: Common folks have small and insignificant surpluses that can be invested. The financially free fave modest investible surplus for generation of future passive incomes. The rich have and invest significant sums every year to further augment already existing high levels of residual incomes.
How to Become Rich
Becoming rich is a process involving various steps.
It is advantageous to start early. When young and strong it is better to work hard as well as smart and earn copious sums of active income, keep lifestyle costs low, avoid splurging, save and make prudent investments. These investments generate passive incomes. Once the passive incomes exceed lifestyle costs, it means one has attained financial freedom. Financial freedom is the first and major steppingstone on the path to real wealth and riches.
Suggested Further Reading:
- Passive Incomes Empowers Pursuit of One's Dreams and Passions
- How To Generate Passive Income?
- Passive Incomes of Financially Free and Not Free Compare?
- Low Lifestyle Costs and High Passive Income Lead to Financial Freedom
- How to Attain Financial Freedom?
- How Will My Lifestyle Affect My Children?
Conclusion
There are three classes of public, namely
the wage earner, the ones who have attained financial freedom and the rich
showing vast differences in their passive income streams and investible
surpluses. Keeping lifestyle costs low, investing to generate residual incomes
leads to financial freedom and eventually to significant riches.