EVERYONE EARNS THE SAME
The information in the article is general only. I am not a qualified financial advisor. Before making any financial decision you should seek the advice of a qualified financial advisor.
I thought something new the other day, everyone earns around the same amount of money each year so it really is how you spend your money that makes a difference in your life.
“What do you mean? Not everyone earns the same amount! Some people earn 40k a year and some 200k a year!?”
Yes I know, but relatively speaking we all earn a similar amount as I will now explain.
You see rich people that earn way more than the average person are the minority not the majority and that is why it’s hard to be rich and that is why everyone wants to be rich.
I’ve mentioned before that rich people are owners, they own the businesses and you can’t have these businesses operating without a bunch of worker bees within the system.
In order for a rich person to make his 1 million, 5 million or even 10 million plus profit per year you need “average” employees within the business for it to function.
Within the business you have a hierarchy of employees earning different amounts of course.
You may have the yard person/forklift driver earning 40k a year then you have the electrician earning 70k a year then you have the engineer earning 100k a year and then you have the manager earning 150k a year. This is all just a simple example.
In economies all over the world most people will fall into the employee category and then you will have the owners of the businesses whether they built it up from scratch or inherited the business and their incomes could be huge in the form of annual profit.
So what does this all mean?
Well you see in the employee category let’s say the minimum lower salaries for a full time worker are around 40k a year (this is pretty true in Australia where I am) and then the high salary mark is around 200k a year for a manager or something it seems like a big difference but the difference is 160k or 5 times the minimum wage salary of 40k.
But if you are in the rich business owner category and you earn 1 million profit a year that’s a wayyyy more multiples of the difference and it goes way up if you’re earnings multiples of millions a year.
So if you don’t count those rich people and think about the majority which falls into those salary ranges then really it’s HOW YOU SPEND WHAT YOU MAKE that makes the difference to your life compare to the majority.
Take an example of someone earning around 70k a year and after tax getting around 50k.
If that person spent $200 a week on smoking cigarettes full time they will be spending 10k a year out of that 50k! That’s 20% of their income.
If someone earns 100k and makes 70k after tax that 10k is still a big hit.
If a multimillionaire smoked full time that 10k a year would be a small percentage of their after tax income. See what I mean?
You need to understand that your employee income is quiet comparable to others who are also employees so the key is how you manage your money.
In the 70k example. That person could quit smoking and instead put that 10k a year into his home loan which is charging him 5% interest a year so if he does that he will save money and his future will be a more positive situation.
Person 1 smokes full time – in 5 years they spend 50k they won’t see again.
Person 2 quits and in 5 years he knocks off 50k from his home loan and saved that interest cost to.
This is just one example; the rest of this site has other money management articles you can read.
The key take away here is most people fall into the majority so that means they earn similar amounts in annual income even if you compare a minimum wage to a high wage so in that case it’s how you manage that similar income that will dictate you future situation in HIGH PERCENTAGE amounts. That’s the best I can explain it hopefully you understand and if not feel free to ask me a question here.
Think of it like a big car drag race where most of the cars are similar in performance, some are a little faster than the others but there is one Ferrari in the race that’s destroying everyone but in the majority of cars you have the drivers who have the choice whether to put their foot all the way down or half put their foot down so you can “beat” the majority which basically means you get to where you want to be if you keep your foot down on your average car which is good even though the Ferrari can go half acceleration and still annihilate everyone lol.. kind of sucks but hey we are all mostly in the majority so let’s make the best of our comparable incomes and manage our money well to improve our life situation.