FinanceSyrup

Many people’s personal financial goal is to become rich and wealthy- it is shared by the vast majority of the world’s population. Who doesn’t want to live in affluence and never have to worry about where to get the things they need on a daily basis? certainly no one!

For some reason, the words rich and wealthy are often used interchangeably to describe the same thing. These two words may appear to be synonyms, but they are not. Let’s look at the distinction between the two.

Rich vs Wealthy meaning

The state of being wealthy refers to having an abundance of valuable goods, resources, and other material possessions. It is when a person is able to provide his family and himself with everything they require while still having enough money for luxuries.

It is associated with wealth, abundance, and opulence. A person can become wealthy by working hard or by inheriting it from his parents.

A wealthy person possesses real estate, buildings, business holdings, and a more-than-adequate supply of money that he can spend in any way he sees fit.

What does it mean to be Rich?

Being rich simply refers to having a lot of money or income. It all comes down to the amount of money in your bank account. But just because you’re rich doesn’t mean you’re wealthy.

In fact, being rich can frequently imply that you spend a lot of money. It could also indicate that you are deeply in debt. It makes no difference how much money you have if your expenses exceed your income. Being in debt is not something to strive for!

Rich people may drive a fancy car or live in an amazing house in the best part of town, but it comes at a price. If you earn $200,000 per year but spend $225,000 per year on expenses, you may appear rich, but you’re on your way to bankruptcy.

What is wealth?

Wealth is the total value of assets accumulated by an individual, business, organization, or nation, including tangible, intangible, and financial assets. It refers to the possession of scarce economic resources, goods, money, or anything of value at any given time while excluding debts or liabilities.

Also known as net worth, it protects individuals and businesses from unforeseen economic events such as recessions. It also enables them to achieve financial independence and live the lifestyle they desire.

In contrast to income, which is a flow variable, net asset value is a stock variable. Assets can be used for any type of transaction, such as property or business ownership.

What’s the difference between the wealthy and the rich?

While the difference between rich and wealthy or wealthy vs rich is defined by the amount of money in your bank account, it extends beyond that. When you think of a rich person, you usually think of someone who has a large salary or income stream.

However, someone earning significantly less, even under six figures per year, can be in far better financial shape due to aggressive saving and investing.

Rich people will spend a lot of money and live a luxurious lifestyle. Instead, wealthy people prioritize saving and investing a significant portion of their income. And perhaps even living as if they only have a middle-class income.

Rich vs wealthy: See the difference

Rich

• There is no or little financial planning centered on affordability and spending
• High expenses compared to income
• Money is limited and will eventually run out.
• Riches are typically represented by cash or material assets.
• Usually reliant on a high salary or income, with no long-term investing strategy.
• Displays material possessions and frequently upgrades lifestyles.

Wealthy

• Financial planning includes tax strategies, estate planning, and budgeting.
• Low expenses in relation to income.
• Money is long-lasting and sustainable.
• Wealth is typically held in investments or long-term accounts.
• Will generate multiple revenue streams in order to reduce risk and diversify income.
• May buy things from time to time, but prefers to buy assets over things.

Difference between rich and wealthy quotes

• “Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.”William A. Ward

• “It is not the man who has too little, but the man who craves more, who is poor.” Seneca

• “Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” Ayn Rand

• “Only buy something that you’d be perfectly happy to hold if the market shuts down for ten years.”Warren Buffett

• “Not he who has much is rich, but he who gives much.”Erich Fromm

• “Time is more valuable than money. You can get more money, but you cannot get more time.”Jim Rohn

• “It doesn’t matter about money; having it, not having it. Or having clothes, or not having them. You’re still left alone with yourself in the end.”Billy Idol

• “Money does not buy you happiness, but a lack of money certainly buys you misery.”Daniel Kahneman

How to Become Wealthy in 2023– Best Tips

#1. Avoiding (and Paying off) Debt

Debt is not always a bad thing, but it should be avoided the majority of the time. Student loans, for example, can be advantageous if the principal and interest rates are not excessive and they allow you to pursue a lucrative career.

Avoiding debt necessitates the development of a sound financial plan and the avoidance of foolish whims that provide short-term satisfaction but long-term financial hardship.

#2. Spend Intentionally and Minimize Costs

If you want to become wealthy vs rich, you must cut costs and be more deliberate with your spending. This is the second step because it should be one of your first actions.

You will need to keep a budget if you want to spend wisely and save money. Your goal should be to cut costs as much as possible so that you can put that money towards wealth creation.

#3. Invest as much as you can in a diverse portfolio

While there are limits to how much you can put into an investment, they are so high that many people are unable to meet them. If you do, you can always increase your investment in a taxable brokerage account. Thus, if you want to become wealthy, you should invest as much as you possibly can.

There are numerous investment strategies, but most experts advise investing the majority of your money in the stock market. Some people advocate for a smaller percentage of real estate or even speculative investments. Burrow suggests a portfolio consisting of 65% stocks, 25% real estate, and 10% speculative assets of choice.

#4. Work On Your Career

There is no substitute for more money. There is, as they say, a limit to how much you can cut in terms of expenses, but there is no limit to how much your income can increase, at least theoretically.

“As you advance in your career/business/main occupation, make sure you always save more than you spend as you earn raises and increase your gross income,” Burrow advised. “Lifestyle cost creep will completely derail a plan to get rich quick.”

Increasing your income will, of course, be dependent on the job you have. Hourly workers, for example, may have little leverage to increase their income. However, moving up the corporate ladder can be a powerful way to become wealthy because you will be able to save and invest more.

#5. Find an extra source of income

A side hustle is not a new concept, but if you have some extra time and can pick up some extra work for a few hours a week, it can be a powerful way to supplement your income.

Finding a side hustle is sometimes easier said than done, but it can provide you with extra funds to invest in the future.

Conclusion

Being wealthy does not begin with a large wallet full of cash. It all starts with having the right mindset. Save a portion of your income, work towards debt elimination, and invest early and frequently.

If you want to be wealthy, you must always consider your long-term objectives. Do you want to retire sooner? Do you own a few properties? Travel? When considering being wealthy or rich, don’t just consider your income; instead, consider building up your investments and assets to last you several lifetimes.

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Due to past obligations or unanticipated circumstances, there are times when it may be hard for us to complete some tasks and make wise judgments for ourselves. In such a situation, you would require a surrogate to manage your personal affairs or decide on critical healthcare matters. This is when the letter of attornment is useful. A letter of attornment gives the agent the authority to handle a variety of transactions.

What Does Attornment Mean?

When a tenant accepts a new property owner as their new landlord, attornment has taken place. When it comes to commercial properties that are in the process of changing hands, an attorney clause in a Subordination, Non-disturbance, and Attorney Arrangement (SNDA) enables the tenant to accept a new owner as their landlord and keep paying rent regardless of whether the properties are sold at a regular sale or through a foreclosure.

An attorney-client relationship may develop, for instance, if a tenant rents an apartment only to have the owner amend the lease later.

According to the SNDA provision, in the event of a change in ownership, the new owner shall replace the prior owner in the lease. Moreover, they must take on all of the prior owner’s duties and rights. Additionally, the condition mandates that tenants keep paying rent regardless of who owns the flat.

What is Attornment Agreement?

Real estate law is most frequently associated with attorney-client privilege. However, it is intended to recognize the connection between the parties to a transaction. If the occupant does not sign the rental agreement, it does not provide the owner with any new rights. However, the tenant’s unwillingness to sign could be used by the landlord as justification for eviction.

In a mortgage rental property, an Attornment Agreement aids in defining the rights of all parties. According to the agreement, the landlord’s lender, not the tenant, has the highest claim to the property. The occupant’s rights are thus subservient, which is why the agreement is also frequently referred to as a Subordination Agreement.

Even if the landlord violates the mortgage, the lender may choose to accept the terms of the lease. The occupant, however, is required to make timely rental payments. 

How to Write a Letter of Attornment Case Law

In a letter of attornment, the following are often the key components:

• Your name, address, and signature as the principal.
• The name, address, and signature of your Agent.
• The activities and properties under the Agent’s authority.
• The start and termination dates of the Agent’s powers.
• Any compensation you will give to the Agent.
• The name, address, and signature of the person who witnesses the signing.

A letter of attornment gives someone the ability to act in your place, but it does not interfere with your freedom to make decisions or take action. In fact, if there is a difference of opinion between you and your Agent, you still have the last say.

You should think about getting legal advice from a lawyer if you intend to draft a letter of attornment so that you can avoid wasting a lot of time and effort. You can also write the letter by yourself by doing the following:

• Come up with a draft
• Make decisions about springing powers
• Choose your Agent and a Successor Agent
• Add the expiration date
• Finalize your letter
• Affix your signature

#1. Come up with a draft

The first step is to create a list of the unique abilities you intend to give your Agent. You should precisely list the accounts, assets, and transactions that your Agent will have control over because such exceptional powers need to be very specific.

You may need the services of a Financial coach to come up with a detailed draft.

#2. Make decisions about springing powers

A conditional statement has springing power. These powers are not available for use by the agent unless a certain circumstance or condition has been met. Until the condition or event giving rise to the springing power happens, the agent cannot legally act on your behalf.

Without a provision, this form of power can still be used, and your letter will still be enforceable once you have signed it.

#3. Choose your Agent and a Successor Agent

The most crucial part of crafting this letter is probably designating your Agent. A person you can trust should be the Agent you select. Additionally, picking a Successor Agent is advised in case something happens to your first choice.

#4. Add the expiration date

Your letter should specifically state that your Agent’s authority is limited to a certain period of time. But you can create a Durable letter of attornment if you want the agreement to stand for as long as you are alive.

Even if you become unable to perform your duties, this still stands. No matter what kind of letter you choose, keep in mind that this authority expires with your passing.

#5. Finalize your letter

You can now complete your letter after assembling all the necessary data. When outlining the details in the text, use straightforward, unambiguous language. Your letter should include your full name, the full name of your agent, and the full name of your successor agent. Include the time and date you wrote the letter.

#6. Affix your signature

The principal must sign the legal document in front of a notary public for the letter of attornment to be enforceable. Additionally, the document must have all required signatures in order to be finished.

Letter of Attornment Example

Different laws exist in many places around the world regarding letters of attornment. It permits you to treat the money, property, health, and other rights of another individual as you would treat your own. It is possible to write documents for both private individuals and organizations. Documents can range in complexity from simple sheets to complex statements and rights.

Notary Stamps And Signatures

The notary stamp and signatures, which support its legal authority, make it different from a basic letter in most ways. It must also include personal information and the date on which it was signed. The person’s address who will have special powers granted by such a legal instrument must be included in the attorney letter.

Individual Powers

The scope of the powers granted to authorized individuals must also be specified in clear, concrete terms. These powers may be as extensive as your own, but they may also be limited to a few distinct abilities. For instance, you may be able to sell someone a car, but only once, with no further permission.

Date

The date on the letter of attornment may differ from the date on which the actual power will be exercised, which means that it may have been signed in the past but has a legal effect now. 

There must be a specific period of time when this legal document is in effect, according to legislation in many nations, as it is not possible for it to last forever. Another thing to note is that in order for an attorney letter to be effective, the conditions for which it was created must still be in effect when it becomes effective.

It is crucial to include information regarding the termination of the powers granted by this legal document, a letter of attorney, or else it would be insufficient. The letter of attornment makes it significant. It is just one sentence regarding the many rights that are signed by both parties and by two witnesses. The revocation of such a document does not require a justification in writing.

The following is an example of a letter of attornment:

Sample 1

To,
The Court of Law,
Business Legal Documentation,
Reno, Nevada, USA.

Subject: Letter of attornment

Respected Sir,

I wish you well and hope you receive my letter.

On July 1st, 2023, I will attend a performance in the theater. I still have to stay in bed for 90 days once I’m released so that the illness can properly heal.

Due to my inability to work at that time, I won’t be able to handle my regular business or make payments on my expenses.

As a result, for the 90 days beginning July 1 and ending October 1 of 2023, I ask that you act on my behalf.

Please accept my gratitude in advance for your assistance.

Truly yours,
Anderson Moore.

Sample 2

DATE: June 16, 2023
Robert Grant
State Bank
22 Richmond Street
California

Dear Robert Grant,

Along with this letter, please find a letter of attornment that Nina Henry has been given the authority to act in banking on our company’s behalf. Please keep this letter of attornment in your files, and make all internal preparations necessary to ensure that Nina Henry is acknowledged as having the right to handle bank formalities on the company’s behalf.

You can reach me at any moment at 987654321 if you have any questions.

Sincerely,

Brain Berry

Having gone through some of the examples of letters of attornment, you would agree that it requires some level of knowledge to make a better deal. You may want to start your journey by learning about the usefulness of financial literacy.

Conclusion

The format for writing a letter of attornment is quite straightforward and organized. It contains information like the agreement’s date, the names of the landlord, the tenant, and the new lender. Along with the address and signatures of all three parties, this notification typically includes a brief description of the property.

This agreement is primarily used to define the lease conditions associated with a mortgaged property. You may simply rent or sell your property now that you are familiar with the letter of attornment format.

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At the end of each financial period, companies go through a bank statement reconciliation process to understand any differences between the company’s record of cash deposits and withdrawals and the account statement issued by the bank.

A company’s check may have been written and recorded in the general ledger, but not yet shown on the bank account statement.

If the cash balance in your checking account appears to be excessive, it could be due to outstanding checks. Outstanding checks can result in inaccurate accounting, overdraft issues, and other financial blunders.

What is an Outstanding Check?

Outstanding checks refer to checks that have been cashed or deposited. Those checks that have been written by the payer but have not yet been cashed or deposited by the payee.

Until this occurs, the payer’s account balance from the cash flow will remain unchanged. Outstanding checks can cause a slew of issues in the bookkeeping, business accounting, and banking industries.

The time it takes for the postal service to deliver the check and the payee to deposit it results in a multi-day delay between when a check is created and when it is presented for payment. If the issuing entity delays mailing the check for any reason, the check may be delayed as well.

If a check has not yet cleared the bank by the end of the month, it does not appear on the month-end bank statement, nor does it appear as a reconciling item in the issuing entity’s month-end bank reconciliation.

An outstanding check is the payer’s liability until the payee presents the check for payment, at which point the liability is eliminated. If the payee never presents the check for payment, the payer can mark it as void in its accounting system.

How to find Outstanding Checks on a Bank Statement

Do you know how to find outstanding checks on a bank statement? Here’s how to look for outstanding checks on your bank statement.

• Obtain a complimentary copy of your bank statement.
• Make a list of all the cheque payments you must have made.
• Call the people to whom you issued the check.
• Total the money you spent on each.
• Examine previous statements for any outstanding checks.

How to find Outstanding Checks on Bank Reconciliation

• To identify uncleared checks and deposits in transit, compare the company’s list of issued checks and deposits to the checks shown on the bank statement.
• Add any deposits in transit to the cash balance shown on the bank statement.
• Deduct any unpaid checks.
• This returns the adjusted bank cash balance.
• Then, using the company’s ending cash balance, add any interest earned and the number of notes receivable.
• Deduct any bank service fees, penalties, and non-sufficient funds checks. This results in an adjusted company cash balance.
• The adjusted bank balance should match the company’s ending adjusted cash balance after reconciliation.

GAAP rules for outstanding checks

• When a check has been outstanding for more than six (6) months, the payee must be notified in writing that the check was issued and is still outstanding. The notification must include the check number, check date, and outstanding check amount. The payee has 30 days to claim the unpaid check.
• A listing of all checks that have been outstanding for more than six (6) months after notification was sent to the payee and the check was not claimed shall be prepared at least once per year. The funds will be deposited into the unclaimed liability account via a journal entry.
• A listing of all outstanding checks that have been deposited into the unclaimed liability account is made once a year, in September, to determine which outstanding checks (checks dated three (3) years or older) will be sent to the State of Illinois, Unclaimed Property Division, per State Statute.

Why are outstanding checks subtracted from the bank?

Outstanding Checks should be deducted from the bank side of the reconciliation because they were deducted from the book balance at the time the checks were written.

These are checks that the company has written but have not yet been cleared by the bank. When you write a check, it takes a few days for it to clear. At the end of the month, most businesses have a number of outstanding checks.

Outstanding Checks Journal Entry

When an organization prepares a bank reconciliation, it subtracts the outstanding checks from the bank statement balance to determine the correct or adjusted bank balance.

The company does not need to write a journal entry because the checks were recorded in the general ledger account when they were written.

If, on the other hand, a company voids one of its outstanding checks, it must make an entry in its general ledger. Cash will be debited in order to increase the account balance.

The credit portion of the transaction will almost certainly go to the original debited account when the check is issued. The canceled check is also removed from the list of unpaid checks. In order to do this effectively, you must first understand how to prepare a cash flow statement.

Outstanding checks vs unreleased checks 

Outstanding checks vs unreleased checks  – Outstanding checks are that have been issued by the company but not yet presented for payment by the payee.

This commonly occurs when checks are written in the last few days of the month. Unreleased checks have not yet been issued to the payee but have been deducted from the cash account. Payments will not yet be reflected as withdrawn from the bank in either case.

How to write off outstanding checks

When you wrote a check to a vendor and they didn’t deposit it within 180 days, you could simply write off the check and debit the money back to your checking account.

It was a fairly simple procedure. You had a list of outstanding checks that hadn’t been cashed yet, and as the 180-day mark approached for each check, you’d simply void it.

Here is the process by which you can write off outstanding checks

• Make a list of outstanding checks or obtain one from the bank.
• Checks that are no longer redeemable should be voided.
• Return the amount of the canceled check to your checkbook balance.
• Make an adjusting journal entry, debiting your bank account for the amount of the voided check and crediting the expense account that was initially debited.
• Delete the check from the list and move on.

How to determine outstanding checks

According to moneyzine.com, business Z had $200,000 in checks drawn from its general account in December. Business Z discovered a balance of $12,000 in outstanding checks during the November bank statement reconciliation process.

Business Z received a bank statement that showed $196,000 in checks paid in December. The outstanding checks for Company Z at the end of December would be calculated as follows:

With the above illustration, do you think we can now calculate our outstanding checks? Consider the example of outstanding checks.

How to Prevent Outstanding Checks

Outstanding checks are a common cause of bank overdrafts. Maintaining a balanced checkbook is one way to avoid this occurrence. If the payee decides to cash the check later, this can help avoid any unnecessary NSFs.

You can also call or write the payee to remind them that the check is still outstanding. This could persuade them to deposit or cash the check. If they haven’t received the payment, they may contact you to reissue the check.

With banking becoming progressively electronic, using the checking account’s online bill pay service is another way to avoid writing a check and forgetting about it. This will have to provide real-time data on the total dollar amount of checks outstanding as well as the total dollar balance in the account.

Reconciliation of bank statements with outstanding deposits

On January 31, you received a $500 check from a customer. You record $500 in earnings in your books. You put the money in your bank account on February 3rd. When you reconcile your January books, you will notice that $500 is missing from your January bank statement.

Subtract the outstanding deposit from your small business ledger to adjust your records.

Conclusion

As a business, you are responsible for ensuring that your books are properly closed. Knowing your outstanding deposits enables you to keep accurate financial records. You can avoid accounting problems by reconciling your bank account.

When doing your bookkeeping, there is always the possibility of making a mistake. To avoid forgetting important monthly tasks, create a small business accounting checklist. Bank statement reconciliation ensures that your bank statement and books are in sync. If you don’t reconcile your accounts, you’ll waste more time and money correcting errors.

You can also use bank statement reconciliation to track the progress of your business. You can measure profitability and forecast cash flow by using outstanding deposits to balance the accounts.

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