Consuming content on wealth building helped me categorized what areas people who have keep versus those who own less or nothing.
It starts with the pursuit on choice or the freedom to choose what you want to do in life. Most don't live the privilege to live the life they want because of the lack of resources. We end up in a rat race. To secure the freedom to choose, people need to build wealth to have a shot at having a choice. I'm not going to touch Ascetism here because that one is a different field entirely.
Things Needed for Wealth Building
Hard Assets:
You need to own your house and the land it's built on. If it can produce something you can market, even better. Let's say the price of land can go up and down during the times, it's still a finite source.
If your land can produce an apple worth 1 dollar, and the apple's price rises to 3$ a piece, you still get to have a land that produces an apple so price in the future doesn't shake you. Same thing about rental costs, if your family owns the house, you wouldn't worry about skyrocketing rental prices. The prices tag can change throughout the times but the utility it brings when you own it stays relatively the same.
Let's say a house's property price was less than what it was when you bought it a year ago, well it doesn't really matter if you intend to live in it indefinitely and you don't have to worry about rental costs. So a property can be valued x3 and more but none of that paper value matters if you have no plans selling it. It matters for property taxes but that's another story.
This is why during periods of high inflation, the rich know that owning the hard assets is more important than paper money because regardless of the tag price, you own something solid that people need and it's a finite source while the money printed is electronically made out of thin air. That's why it can be foolish sometimes to trade your land for paper money than can devalue through inflation while your land doesn't.
Rights and Laws
It's no coincidence that affluent families would have political connections. They need people in the government to not only protect their assets, but ensure laws are passed to legitimize and protect their businesses in the future. This is a must needed route for survival through the generations. The rich are incentivized to go into politics for selfish gain to protect their clan's interests.
Leverage
Acquire assets that generate income. The asset here is time. Eventually, your body breaks from wear and tear so investing in things that generate you money while you don't have to invest the time and energy for it is the key. Own stocks, own a piece of the company and get dividends from it's performance, invest in REITs, or pay someone else to save you time while you focus on important things that earn you more money. If you have no system that lets you earn without you moving, you won't be able to build wealth. So if you earn money, use that money to buy more assets that generate you more money while reducing your workload.
Financial Protection
Insurances are worth the money. In the Philippines, majority are just one hospitalization away from losing what modicum of wealth they have acquired. This is why people ensure their properties and health just in case something happens that prevent them from earning their usual income when they are sick and prevent those out of pocket expenses.
Education
The rich invest a lot in their children's education and would even go as far as hiring private tutors for subjects outside the regular program children of similar age go through. Education or information is an investment and that compounds over the years. It also follows prestige where one graduates from well known school and opens up to more connections in life.
Social Network
It's link to the benefits of Education. They send their kids to exclusive schools because other affluent families also send their kids to the same school. Connections are built early within peers and the next generation to handle the family business is nurtured within the academy.
I write these posts as notes to myself whenever I'm studying but if you found these helpful, good for you.
Thanks for your time.