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Earned Income

In the beginning, nearly everybody starts off working for earned income. Every person on earth starts out with a poor understanding of money. Each time you find money in your hands, you make decisions on how to spend that money. The quality of these decisions depend on your understanding of money. These decisions determine weather you will be rich, poor, or middle class. It is only through persistent effort that your knowledge and understanding can be increased.

Your main goal largely determines your focus. If your main goal is to cover your expenses, then your focus will be on increasing your earned income. If your next concern is how you will afford retirement, than you will probably save a portion of your income for your retirement costs. In order to afford the retirement savings, you again focus on increasing your earned income.

Working for earned income is the first rung on the financial education ladder. It requires very little financial education and usually requires 40 hours/week. People who spend their life focused on earning income limit themselves to the poor or middle class. The poor work to earn an income, which they spend completely on expenses. The middle class also work for an income, which covers their expenses, liabilities (mortgage), and retirement savings (portfolio).

Rich people do not work for money, they have money work for them (passive income). They replace their earned income with streams of passive income. More specifically, they manage businesses and real estate. The process by which you convert earned income to passive income is called investing. Your degree of knowledge and understanding determine the success or failure of your investment plan.

The degree of knowledge and understanding you have are related to the amount of time you invest into learning and increasing your knowledge. Rich people may or may not also have portfolio income, but this is not how they become wealthy.

Therefore, if you want to become wealthy, you need to begin learning more and increase your understanding and ability. This will lead you down one of two pathsFeature Articles, depending on your ultimate goals…

Portfolio income

Passive income

Source: Free Articles from ArticlesFactory.com

ABOUT THE AUTHOR


Hello my name is Robert but you can call me Bob, a year ago I made a decision that I would not be a slave to money. This is what I learned.Free - Debt Help RSS feed- no sales junk only helpful content to guide you on your journey to financial independence. http://www.cleveland-real-estate-debt-help.com/debt-help.xml



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