Formal employment and careers usually sound good but in reality, they are a wealth trap form most people. In this article, we’ll be breaking down How To Beat Wealth Traps Most People Fall Into.
Wealth Trap 1: Having Income Tied To Time
This is one of the biggest reasons why people never build wealth. You see, most people work a job where their income is tied to the amount of time they put in.
Hourly workers and salary workers struggle to build wealth because to increase their income, they have to either charge more or work more hours.
Either way, you’ll reach a cap on the amount of money you can make.
The route many people take is to stay with the same company, working hard every day, until you get a promotion and increase in pay.
By the time you get there, you will be working at least 10 hours every day, with a modest increase in income.
You’ll continue doing this until you retire, at which point you lose your active income and most likely will not have a sizable nest egg.
Related: Building Wealth Is Really Simple
Wealth Trap 2: Being “Cash Strapped”
Starting an income generating side hustle is something you should not postpone doing regardless of your age. Your current financial situation doesn’t matter, as well.
Here’s the thing: The more income you have, the more money you should have to invest to make more money.
You want your cash to recycle itself to the point your income and wealth continually increases.
Investing in extra income generating ventures to build a financially stable future is a must. Even if you already have stocks and bonds, you should still strive to have enough cash to finance the lifestyle you want.
Think about how your life would change if something unforeseeable happened. Will you get enough cash from your investments to last a lifetime?
Realize that stocks and bonds are good investments, but they are usually insufficient means of income upon retirement. Most people who follow financial advisers and put all their money into these investment options struggle financially in case of life-changing events.
The best solution out of a wealth trap is to have multiple income-generating options and put the money into other opportunities to bring in more cash.
The Solution: Multiple Streams Of Income
Having multiple streams of income is the solution to the wealth traps. Start with one side hustle and grow it to the point where you can hire people.
Once you reach that stage, you can decide if you want to grow it into a million dollar venture or continue to enjoy the current cash flow.
Then, you can use a portion of the profits from that venture to invest in another venture. You can rinse and repeat this formula for as long as you want.
If you haven’t already started your side business, you can download our free guide, 25 Six Figure Businesses You Can Start Today.
Thanks for reading How To Beat Wealth Traps Most People Fall Into.