Wednesday, January 14, 2009

The Rich, Poor and The Average

Everybody talks about getting Rich.  Most often people just categorize between the Rich and the Poor.  Sometimes if we hear too much of it, we may forget the majority are actually the Average.

The gap between the Rich and Poor is also getting wider and bigger.  That is because more and more people become the Average everyday.

The Poors think they have no money and therefore do not need Financial Planning.
The Richs think they do not need to worry about Finance right now.
So most of the people who believe in and are actively practising Financial Planning are the Average !

The Averages and the Poors are usually easier to define as they are closely relate to each other.  The Rich however is a bit tough because the 'richness' gap among themselves are huge !

Lets try look at this from the income point of view in this writting.  In Malaysia and in MYR$ units, a Rich guy would probably earn more than $20,000 a month, an Average guy earns from $2,000 to $6,000 and a Poor guy earns below taxable income and usually below $800.

And below shows some stereotype figures of total monthly usage from them.

Since there are more people among the Average perform Financial Planning, not many of the Average would drop back to the Poor, a few even make it to the Rich.  And some of the Rich did not manage their wealth properly and often drop to the Average within a short period of time, if not straight to the Poor sometimes.

It is easier for the Rich to drop back to Average than the Average to drop to Poor.
More Poors become Average than Average become Rich.
Eventually the Average gap grows wider and bigger.

People usually move from one range to another by increasing or decreasing Income.  Those are the ones who may be upgraded or downgrade again once their income changes.  But if you change 'group' not by changing your income but by a good finance plan, you will most probably never be downgraded anymore.

No matter which group you are in, as long as you have a solid finance plan, you can achieve finance independant within your own life style.

So achieving Finance Independance is not to become Rich, its simply by identifying your own life style and come up with a solid finance plan to support it Forever.