How can I be rich without being lucky?

During the course of our academic education, we gain knowledge about different sciences, but we did not learn how to become rich. We did not learn how to deal with money. They tell us to work hard to get a job with a high salary and social status, but they do not teach us how to make money grow by itself. Rather, our knowledge about money is linked to With accounting, companies, numbers and difficult equations.

But do you think you can get rich when your idea of money is wrong? Or do you think that the rich got rich due to reasons beyond their control or that they were lucky? Have you honestly asked yourself how they became rich?

Reaching the stage of being rich represents the result of a journey of positive dealing with money, without being hindered by luck or external circumstances, because what you think in your head you will see before your eyes. In this article, we will present financial behaviors and beliefs that you must take into consideration if you decide to be rich.

The difference between assets and liabilities:

The first and basic rule in the journey to becoming rich is to learn the difference between assets and liabilities. Many people stumble in their financial lives as a result of not understanding the difference between them.

Assets are simply the thing that results in money coming into your pocket. There are many things that can be considered assets such as real estate investment, buying shares in companies, investing in a balanced investment portfolio, business, writing books and giving online courses, or even visual or audio content or Read online.

All of these examples result in a stream of income for their owner. These examples may require you to spend time, effort, money, or both at some point, but after that they will continue to work without intervention or with little follow-up.

As for liabilities, they are things that take money from your pocket, such as spending on cars, vacations, purchasing clothes and electronic devices, and eating out of the home. All of these examples result in a decrease in the amount of money you have as a result of repeated payments.

Spending on liabilities in an uncontrolled manner will keep you away from achieving wealth every day. If you look at a person’s budget and notice that it is full of liabilities while his assets are limited to one or two sources of income, then you are certain that he is not on the path to wealth. You, dear reader, can review your spending items and sources of income. To know whether you are on the path to wealth or whether you need to modify your financial behavior. Remember that what money goes into your pocket is considered assets, and what money takes out of your pocket is considered liabilities.

Here we must point out that we are not calling for stinginess or extreme austerity, but we are calling for you to be more aware when dealing with money, because your convictions regarding money are what shape your financial future.

The rich acquire assets, and the poor and middle class acquire liabilities that they believe are assets.

The book of Rich Dad and Poor Dad.

Imagine that borrowing to purchase cars and personal transportation in 2021 amounted to 14,047 million Saudi riyals, and that borrowing to purchase Furniture and durable goods for the same year amounted to 12,214 million Saudi riyals, and this is a compound error because it is not only spending on liabilities, but borrowing to spend on them.

Opportunity cost:

We live in a world governed by relative scarcity, meaning that there is a limit to what we have available for anything. We only have 24 hours a day, and we have a specific amount of resources and a specific amount of money.

This will be reflected in our behavior directly. The time you spend is either studying or going out with friends, but you cannot do both at the same time. The time you spend at work cannot be used to learn programming, and the money you pay for university cannot be used to travel. This means You must choose only one option from among the available options, and this is what we call relative scarcity.

Comparing between the options available to us brings us to the concept of opportunity cost. When we make a choice between multiple options in front of us, we are in the process of balancing the benefits of each option in front of us. If we decide what we want, this means that we see that this option is the best available to us.

Any decision to make a purchase includes two balancing acts, the first balancing between money and the thing you want to buy, and the second balancing between benefiting from the thing you bought and benefiting from buying something else with the money.

For example, buying a piece of candy that costs twenty riyals means that you see that the benefit from the piece of candy is greater than the benefit from the twenty riyals.

On the other hand, you believe that the best option available to take advantage of the twenty riyals is to buy a piece of candy, but if you ask yourself what can be bought with twenty riyals other than candy? Assuming that you can buy a cup of coffee, if there is no coffee, you will buy apples.

This means that your preferences for spending twenty riyals are the first on sweets, the second on coffee, and the third on apples. Based on the concept of opportunity cost, the cost of buying a piece of candy is equal to twenty riyals in addition to the possible benefit from coffee if chosen.

Thus, the cost of any purchase includes two costs, the first cost is the cash cost and the other is the possible benefit from your second option.

There will always be several options for spending money, but we can only use it for one thing. Spending money on consumption means missing an investment opportunity. On the other hand, we must pay attention to the benefit left behind in the best available option, as the cost of purchasing a new car will be the price of the car in addition to missing the opportunity to invest money.

When you make any spending decision, ask yourself, is this the best money option available? What do I lose when I spend money on this option?

Weighing different options will continue with you along the way. If you want to be rich, you must develop your personal financial skills, master the distinction between assets and liabilities, and know the true cost of your options. Remember that the way you deal with money is what determines whether you will be rich or not.