by Brian Cody

Created on: January 31, 2011

Roget's Super Thesaurus defines rich in the following terms;  Abundance, Affluence, Assets, Capital, Bonds and Stocks, luxury, owning means of productions, property, prosperous, Real Estate, Rich.  However, true wealth can be defined as having the knowledge to put your assets and money to their highest and most productive use.

The accumulation of wealth does not always equate with the amount of money one makes by earning a living.  Wealth is created by control your spending and your decisions on what to spend your money on.

 We have seen thousands of Americans who are making anywhere from $60,000 to a six figure income file for bankruptcy and lose their homes to mortgage foreclosure.   The main cause of their bankruptcy filings and mortgage foreclosure were due to their own poor decision making.

 Many Americans are compelled to keep up with their family, friends, neighbors and purchase the best consumer doo-dads' and goods.  The result is that the IRS statistics show that most Americans who are filing their taxes show little or no dividend or interest income reported on their annual tax returns.  The most interest that is reported on American tax returns is the interest on their Home Equity loans and mortgage loans.

 According to the most recent December 2010 government report on the personal savings Rates of Americans that savings rate was reported to be 5.3%.  When the recession started in December of 2007, the December 2007 savings rate  report was under 2%. That does show an improvement in our ability to save money.

 Most Americans receive their source of income from earned income.  Either a full time job or a part time job.  The December 2010 unemployment rate was at 9.4%.  Without having any other sources of income that unemployment rate is devastating to those affected families.

 Diversification of your income is critical for survival in today's economy.  There are two other sources of Income that you focus upon.  One source of income is called Passive income.

 Passive income can be considered deriving income from either a business related activity, or owning either commercial or residential investment properties.

 The other source of income is called Portfolio income.  That is owning assets such as bonds, Mutual funds, stocks.  The income from those assets would be called capital gains, dividend, and interest.  Another source of portfolio income is receiving income from the royalties' from publishing articles, books, e-books, songs.

 Your goal for become wealthy is to produce enough income from both your passive and portfolio assets that will pay your bills, mortgage, and rent.  Only when your  Passive and Portfolio assets exceed your debt obligations can you give up your earned income job.

The true path towards your becoming wealthy starts with educating your self about finance and money.  If you plant an acorn and build your base of knowledge about money management then that acorn will grow into your own Money Tree of Knowledge.

Learn more about this author, Brian Cody.
Click here to send this author comments or questions.