10.05.2011

Cash Flow Inequality: All Animals Are Equal But Some Are More Equal Than Others

Using simple mathematical concept, we would like to categorize people into the following classes, depending on their earnings, spending, and savings.

The poor:
Needs >> income
Inflow of cash = outflow of cash ...All income spent to meet one's needs.

Agur:
Needs = income
Inflow of cash = outflow of cash ...All income spent.

The rich:
Income > needs
Inflow of cash > outflow of cash ...A small savings.

The wealthy:
Income >> needs
Inflow of cash >> outflow of cash ...A big savings

Keys
= means 'equal to'
> means 'greater than'
>> means 'much more greater than'

Those who live by Agur' principle are neither rich nor poor. They have an average livelihood.

It is financial intelligence to live within one's means. That's financial management of resources. Now, there are two extremes to that principle. Firstly, many people (90% of the world population) continue to manage poverty as they have consciously or unconsciously resigned to living within that tight income bracket. Secondly, a few (10% of the world population) do not only live within their means but also they expand their means by seizing career, business or investment opportunities. This therefore enlarges their income bracket.


To expand your means so as to enlarge your income bracket requires:

• Career opportunity such as promotion to higher cadre in an organization or government establishments based on your experience, performance, years of service, or more professional qualifications. This is a slow track to wealth.

• Business or investment opportunities in the money market, property market, internet, etc.

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