Passionate Pursuit of Purpose

Wealth Creation (part 1)

Posted by on Feb 22, 2013 in Character Development, Finding Destiny, Personal Finance | 2 comments

 

What is the difference between wealth and income?

Wealth: the accumulation of excess assets and resources

Revenue: Earning from an asset

Wealth is accumulation of revenue you have kept and not consumed.  Just because a person has high revenues (earnings/income) does not make them wealthy. The ranks of professional athletes, entertainers, and lottery winners, are filled with examples of people who had extremely high incomes, but were never wealthy and when their high revenues ceased, they became worth less than zero. 

So how does one become wealthy?

Wealth or lack thereof is derived from the following equation:  revenue minus expenditure equals income or loss. 

Income graphic 

So each year we have a surplus of revenue over expenses we accumulate a brick of abundance to create a reservoir of wealth in your life. Each year of deficit (when expenses exceed revenues) we take some of those bricks of abundance away.  In America today many of us borrow bricks of abundance from the future bricks of abundance we expect to get later, leading to an accumulation of deficits (better known as debt).gold bars

Our first rule of wealth creation is: “Earn more income than you consume each year”

 What are you doing to increase your revenue and/or decrease your expenses?

Coming soon wealth creation pt.2 to learn about how Accumulation surpluses and deficit affect your wealth

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