Lifestyle Cycle vs. Wealth Cycle

Reprint of original article posted on Liveoutloud.com
When we think of wealth, there are usually particular pictures that come to mind: homes with more rooms than we can count, a pool, expensive cars in a long driveway, designer furniture and fashions. Ah, the lifestyles of the rich and famous!

So, we get the impression that if we don’t have musical talent, great sports ability, or the capacity to churn out award-winning movies, we can at least work harder, or find a better paying job. Once we start getting paid more, then we count on the fact that we can now buy more. It’s time to now move into a larger house so the kids can spread out, and it’s time to put the old clunkers to rest and buy brand-new vehicles to ferry us back and forth to our jobs and the kids to soccer practice.

Doesn’t this seem like a wealth cycle? Aren’t we on the gravy train now?

As a matter of fact, the answer is no. Emphatic no. The reason? The additional money you are earning is being poured into avenues that are not earning you money in return. While the house will be the most worthwhile investment, think about the car: it begins to lose value the moment you drive it off of the lot. Same with a boat, or an RV.

Acquiring goods is not necessarily a bad thing, but it can be if it places you into a cycle of expense and liability. Your money is caught in a never-ending cycle of “spend more” and on a much different level from “earn more”.

How do you switch gears?

It comes down to building a wealth cycle. With a wealth cycle, you pay yourself first. With a car or a new wardrobe? No! In a wealth cycle, you work to accumulate assets that you will then invest so that it will create passive income. It’s the gift to yourself and your loved ones that keeps on giving.

When you think about the lifestyles of the rich and famous, you may also remember some of the sadder stories: famous people who are suddenly having to claim bankruptcy and having to sell their lavish home at a desperation price. Unfortunately, a lifestyle cycle is a spiral that has no foundation, and when it falls, there is no safety net. In a wealth cycle, the foundation is laid first, and the lifestyle can be built into your plan.

So, what is your preference? Lifestyle cycle or wealth cycle?

About Loral
Loral Langemeier, founder of Live Out Loud, is the best-selling author of, The Millionaire Maker: Act, Think, and Make Money the Way the Wealthy Do. A team made multi-millionaire by age 35 she actively invests in business, the stock market, multiple real estate ventures and more. Through her diverse experience, she developed the concept of a Financial Wealth Cycle which is the core of her coaching programs. President of several companies, Loral is a nationally known speaker, coach and author.