TIME Economy

The U.S. Economy Grew at a 2.3% Rate in Second Quarter

Despite the solid growth percentage, government data shows that the nation's workforce is growing at a weaker pace

(WASHINGTON) — The U.S. economy posted a solid rebound in the April-June quarter after a harsh winter, led by a surge in consumer spending and a recovery in foreign trade that bode well for the rest of the year.

It also ended up squeezing out some growth in the first quarter, reversing an earlier estimate that the economy shrank at the start of the year.

The Commerce Department said Thursday that the gross domestic product, the economy’s total output of goods and services, grew at a 2.3 percent annual rate in the second quarter. The government also said GDP in the January-March period grew 0.6 percent instead of shrinking at a 0.2 percent pace.

The latest results mirror a familiar pattern over the last few years. The economy has consistently underperformed in the first quarter and then revved up in the spring and summer. The uneven momentum has contributed to overall tepid growth since the Great Recession officially ended in June 2009. It’s been the slowest recovery since World War II.

Revised GDP figures for the past three years released by the government Thursday reveal that the economy’s already-modest growth since 2011 was even weaker than thought.

Economists, however, are hopeful about the rest of 2015. They expect overall GDP growth to continue strengthening in the second half of this year to around 3 percent, as consumer spending benefits from sizable employment gains. The upbeat outlook explains why the Federal Reserve appears on track to start raising interest rates this year.

On Wednesday, the Fed noted that the job market, housing and consumer spending have all improved. But it kept a key rate at a record low near zero, where it’s remained since 2008. The Fed said it still needs to see some more gains in the job market and feel reasonably confident that low inflation will move back to its 2 percent target rate.

Many economists peg September for the first rate hike, while others say the Fed might wait until the end of the year.

“The second-quarter U.S. GDP data support the Fed’s more upbeat tone on economic conditions and suggests that the economy could cope with higher interest rates.” said Steve Murphy, U.S. economist with Capital Economics.

The second quarter figure was the best showing since a gain of 4.3 percent in the third quarter of last year. The GDP report was the government’s first of three estimates.

In the government’s newly revised figures for 2012-2014, the economy expanded at just a 2 percent annual rate, down from a previous estimate of 2.3 percent. Nearly all the weaker-than-expected growth occurred in 2013, when the government now says the economy expanded just 1.5 percent, much less than its previous 2.2 percent estimate.

The modest expansion has raised concerns that the U.S. economy has entered a period of historically slow growth. The nation’s workforce is growing at a weaker pace, and employees are less efficient than before the recession, government data show. Those trends could restrain future economic growth.

The changes result from Commerce’s annual revisions to its growth data, which are based on updated data from the Census Bureau, IRS and other agencies.

In the second quarter, consumer spending, which accounts for 70 percent of economic activity, expanded at an annual rate 2.9 percent in the second quarter. That is a sizable pickup from the 1.8 percent growth in the first quarter.

Trade also served as a small boost to overall growth. It added 0.1 percentage point to growth after subtracting nearly 2 percentage points in the first quarter. The swing reflected a rebound in exports, which had plunged in the first quarter, and a slowdown in imports.

Trade in the first quarter was hurt by a labor dispute at West Coast ports and the rising value of the dollar, which was making U.S. goods more expensive in foreign markets.

Business investment, which has been hurt by a sharp cutback at energy companies in response to falling oil prices, fell at an annual rate of 0.6 percent in the first quarter. That reflected in part a drop of 68.2 percent in the category that covers oil and gas exploration activities. That decline followed a 44.5 percent plunge in the first quarter and was the biggest fall in that sector since the spring of 1986.

Housing construction was a bright spot for the economy in the second quarter, rising at a 6.6 percent rate, slightly slower than in the first quarter. The government sector grew at a 0.8 percent rate as gains in spending by state and local governments offset a drop at the federal level.

Businesses added to their stockpiles at a slower pace in the second quarter, translating into a 0.1 percentage point drag on growth.

TIME stocks

U.S. Stock Market Sees Biggest Drop of the Week

Financial Markets Wall Street stock exchange
Seth Wenig—AP Trader Eric Schumacher stands under an electronic display on the floor of the New York Stock Exchange on July 9, 2015, in New York.

Mixed company earnings weighed on stocks as the week wore on

The U.S. stock market capped a four-day losing streak with its biggest drop of the week.

Disappointing quarterly results and outlooks from several companies pulled the major stock indexes sharply lower on Friday. New signs pointing to a slowing of China’s economy also added to investor jitters, bringing down the price of oil and other commodities.

While corporate profits have mostly exceeded Wall Street’s expectations so far this earnings season, investors have grown uneasy as many companies provided cautious outlooks or weak sales.

“The revenue numbers have been very shaky,” said JJ Kinahan, TD Ameritrade’s chief strategist. “After next week, we’ll have a much better picture overall how the earnings season was. But right now, that’s the theme that I’m seeing, and it’s not a healthy one.”

The mixed company earnings increasingly weighed on stocks as the week wore on. The Standard & Poor’s 500 index has now lost ground four out of the last five weeks.

The S&P 500 ended the day down 22.50 points, or 1.1 percent, to 2,079.65, while the Dow Jones industrial average slid 163.39 points, or 0.9 percent, to 17,568.53. The Nasdaq composite lost 57.78 points, or 1.1 percent, to 5,088.63.

Stocks kicked off the week on a strong note, driving the Nasdaq to its latest record high and bringing the S&P 500 close to a milestone of its own. But it’s been downhill since then. The Dow fell into negative territory for the year on Thursday. As of Friday, it was down 1.4 percent for 2015.

The tech-focused Nasdaq remains the best-performing index for the year. It’s up 7.4 percent, compared with 1 percent for the S&P 500.

Trading got off to an uneven start on Friday. The major indexes were all down by midmorning as traders sized up the latest corporate earnings.

Biotechnology company Biogen and pharmaceutical company AbbVie both reported a better-than-expected second-quarter profits, but their revenue fell short of Wall Street forecasts. Biogen plunged $85.02, or 22.1 percent, to $300.03. AbbVie declined $2.44, or 3.5 percent, to $68.08.

Capital One Financial, which announced quarterly results a day earlier that failed to live up to financial analysts’ expectations, sank 13.1 percent. The stock ended down $11.91 at $78.86.

Even a dash of merger news, which often puts investors in a buying mood, failed to impress.

Anthem agreed to buy rival Cigna for $48 billion in a deal that would create the nation’s largest health insurer by enrollment, covering about 53 million U.S patients. Anthem fell $4.35, or 2.8 percent, to $150.86, while Cigna lost $8.64, or 5.6 percent, to $145.72.

Investors did welcome Amazon’s latest quarterly report card. The e-commerce pioneer announced a surprise profit late Thursday. The stock vaulted $47.24, or 9.8 percent, to $529.42.

Nine of the 10 sectors in the S&P 500 ended lower. Health care stocks fell the most, 2.5 percent. Utilities edged higher.

Of the 187 companies in the S&P 500 that have reported earnings so far, about 72 percent of them have delivered results that beat Wall Street estimates, according to S&P Capital IQ. That’s better than the historical average of 66 percent.

“Generally most companies are seeing modest growth, but nothing to write home about,” said Brad Sorensen, managing director of market and sector analysis at Schwab Center for Financial Research.

Another 163 companies, or a third of the S&P 500, are due to report earnings next week, including Facebook, Twitter and Exxon Mobil.

In energy trading, the price of oil continued to slide Friday as the number of rigs drilling for oil in the U.S. rose. Benchmark U.S. crude fell 31 cents to close at $48.14 a barrel in New York. Crude fell 5 percent for the week, and is down 19 percent for the month. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 65 cents Friday to close at $54.62 a barrel in London.

In other futures trading, wholesale gasoline fell 2.4 cents to close at $1.828 a gallon, while heating oil fell 2.5 cents to close at $1.630 a gallon. Natural gas fell 4 cents to close at $2.776 per 1,000 cubic feet.

Precious and industrial metals futures closed broadly lower. Gold lost $8.60 to $1,085.50 an ounce, silver gave up 21 cents to finish at $14.48 an ounce and copper edged down less than a penny to $2.38 a pound.

The price of U.S. government bonds rose slightly. The yield on the 10-year Treasury note fell to 2.26 percent from 2.27 percent late Thursday.

TIME Donald Trump

Donald Trump Worth More than $1.4 Billion, Forms Show

Trump says he's actually worth $10 billion and the forms are inadequate

(WASHINGTON)—Federal election regulators released new details Wednesday about Republican presidential candidate and celebrity businessman Donald Trump’s wealth and financial holdings, weeks after he estimated his net worth at roughly $10 billion.

Trump, widely believed to be the wealthiest person ever to run for president, holds leadership positions in more than 500 business entities, according to his 92-page personal financial disclosure, a report required of all presidential candidates.

While the documents don’t prove or disprove Trump’s top-line estimates, even a conservative reading of his annual income — well over $250 million — shows he is more than equipped to personally finance a high-dollar presidential bid. So far, he has lent his campaign $1.8 million and boasted, “I’m not using donors.”

The report shows his assets to be worth well above $1.4 billion, including at least $70 million in stocks. Trump carries debt of at least $240 million.

It’s impossible to tell from the documents exactly how much Trump is worth because the figures are detailed in broad ranges, with the top category being “more than $50 million.” Trump has complained that the forms aren’t adequate to reflect his wealth.

The forms released by federal regulators build on documents the candidate put out several weeks ago.

Trump’s presidential campaign has affected his bottom line beyond just what he’s putting up to finance his run.

His characterization of illegal immigrants from Mexico as “criminals” and “rapists” prompted beauty pageants and television networks to cut ties with him. He’s no longer with NBC, where his show “The Apprentice” had generated $214 million for him over its 14 seasons. He said his TV production company brought in at least $4 million in recent revenue.

NBC dropped the Miss Universe and Miss USA pageants, both owned by Trump, over his comments. His report says he earned $3.4 million recently from Miss Universe, which he said was worth between $5 million and $25 million.

Trump’s self-described net worth would far surpass previous magnates like Ross Perot, business heirs like Steve Forbes or private-equity investors like Mitt Romney, the 2012 GOP nominee.

TIME Companies

Citigroup to Refund $700 Million for Deceptive Card Practices

A Citibank branch on Park Avenue in New York City.
Craig Warga—Bloomberg via Getty Images A Citibank branch on Park Avenue in New York City.

8.8 million consumers were affected by selling of illegal 'add-on' products by Citigroup

(NEW YORK)—Citigroup will refund $700 million to consumers and will pay $70 million in fines for illegal and deceptive credit card practices, the bank and federal regulators said Tuesday.

The order, coming from the Consumer Financial Protection Bureau, is the latest multimillion dollar settlement against the largest credit card issuers for their role in selling “add-on” products to customers, such as credit score monitoring or “rush” processing of payments. Bank of America reached a similar, slightly larger settlement with regulators in 2014 and JPMorgan Chase was fined in 2013.

Under its agreement with the CFPB, Citi will issue refunds to 8.8 million affected consumers who paid for these types of add-on products, and will pay two separate $35 million fines to the CPFB and to the federal bank regulator the Office of the Comptroller of the Currency.

“We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” CFPB Director Richard Cordray said in a statement. “This is the tenth action we’ve taken against companies in this space for deceiving consumers.”

Some of the illegal activity by Citi goes back to as early as 2000, the CPFB said, and ended in 2013. In one case, Citi telemarketers allegedly sold consumers identity theft protection services with a 30-day “free” trial, when no such free trial existed. In another situation, Citi sold credit monitoring services when Citi wasn’t performing such services at all, or were not actively monitoring a consumer’s credit file with credit reporting bureaus.

Citi also allegedly misrepresented its customers by charging a $14.95 “expedited” payment fee to customers who made over-the-phone payments and did not disclose to no-fee options.

Credit card add-on services were a controversial but lucrative source of revenue for banks for several years, often aggressively sold to consumers as ways to protect their credit scores, identities or protect them if they lost their jobs. The marketing of such practices largely ended after increased regulator scrutiny.

In a statement, Citi said it stopped illegal practices in 2013 and is in the process of issuing statement credits to the affected customers. If the customer no longer has an account at Citi, a check will be mailed, the bank said.

Citi has already set aside the money to pay for the settlement, a spokeswoman said.

Citigroup shares rose 28 cents, or 0.5 percent, to $59.12 at midday amid a broad market decline.

TIME Parenting

How to Raise Kids Who Actually Understand Money

child-piggy-bank
Getty Images

Allowance should not be given in exchange for chores

There are parenting books you should read but can’t because you’re too busy parenting, and then there are … pretty much no other kind. So, use our Crib Notes to make sure you always sound like you know what you’re talking about. Next up, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, And Smart About Money, from New York Times money columnist Ron Lieber. The book explores ways to think and talk about money with children, and offers some best practices for bringing up kids who are financially savvy without being entitled or avaricious.

Sign up here for TIME for Parents, a weekly roundup of the most interesting parenting stories.

1. Start talking to your kids about money early and often

An understanding of money is no longer optional Your kid will likely grow up in a world where college loans are massive, health insurance is self-provided and retirement savings are ill-defined. At the same time, social media will amplify wealth disparities amongst them and their peers, so they’re at risk of developing animosity or self-esteem issues. On the plus side, there might be hover boards.

Traditional objections to discussing finances with kids are misguided — Talking to your kids about family finances won’t steer them toward greed. To the contrary, money is a great tool to encourage positive traits like curiosity, patience, thrift, modesty, generosity, perseverance and perspective. And, no, that doesn’t mean you should just spend a bunch of it on a life coach for your kids.

What you can do with this

  • Your kids will naturally start to express curiosity about money at some point. When they do, don’t evade them; engage them.
  • Whatever their questions — and the most common are “Are we poor?”, “Are we rich?” and “How much money do you make?” — respond with “Why do you ask?” This will give you and your kid context to explore the more complex answers, and it’s a better response than, “Yes, no and less than that jagoff Alan in accounting.”
  • With older kids, go over some facts and figures about your income and the family’s expenses. This gives them an understanding of the difference between what you make and what’s actually in your wallet, and it keeps them from Googling “How much does that jagoff Alan in accounting make?”, which will lead to all sorts of misconceptions (not to mention an understanding of what jagoff means).

2. Yes, you should give your kid an allowance; No, it shouldn’t be in exchange for chores

Allowances are about teaching kids how to save and spend — A work ethic is something kids should learn outside the home, in school or at a part-time job. Chores are how they gain an understanding of the family unit and the role they play in maintaining it (since Mommy will leave both of you if those Legos don’t get cleaned up).

What you can do with this

  • Start them with $.50-to-$1 per year of age, which means they get a nice raise each birthday and will distract them when you forget to buy them a present.
  • Give them 3 money jars: a “Spend” jar for impulse buys, a “Save” jar for big-ticket items and a “Give” jar for charitable donations. Help them establish how much goes in each, and as they get older give them increasing control over that decision. Establish incentives for saving (like interest) and encourage them to research the charities that they’ll donate to before doing so.
  • When they inevitably want to spend their own money on something stupid, don’t feel obligated to give them a detailed explanation of why you won’t allow on the spot. As the parent, it’s your prerogative to think it over carefully before explaining why sex-worker Barbie doesn’t jibe with the family values.

3. Both spending and giving present opportunities to teach money smarts

Set spending guidelines and model sensible tactics — Your kids are unmolded lumps of clay in their understanding of how money really works, so go beyond simple rules that dictate “what” and provide explanations of “why” you do the things you do with your money, from a practical standpoint but also a values standpoint.

What you can do with this

  • Introduce the “Hours-Of-Fun-Per-Dollar” test. Which purchase will bring your kid more long-term bang for the buck — a $2 deck of cards or a piece of plastic that blares catchphrases from the latest animated blockbuster? And if your kid doesn’t like cards, now’s the perfect time to teach them poker so you can get some of that allowance back.
  • Introduce the “More Good/Less Harm” rule. Does the t-shirt with the fart joke that’s made in an Indonesian sweatshop for the brand with discriminatory hiring practices do more harm than good? Could you buy something from a local business that’s just as awesome and also helps the neighborhood in a tangible way?
  • Explain to them what charitable causes you give to and why. Let them select their own charities for their “Give” jar and always make sure the donation is made in their name. You’ll forfeit the tax deduction, but they’ll establish a personal relationship with the charity that encourages future giving. Also, why do you care about a 2-digit tax deduction, you cheap bastard?

4. Put the kid to work

Little kids like to have jobs to do — Encourage their innate industriousness before they get old enough to realize that work is work. You might change the trajectory of their lives (or you might just get a few more months of room cleaning out of them).

Employment looks good on a resume — There’s a strong correlation between teenagers with part-time jobs and good GPAs and college expectations. Furthermore, college admissions officers are often as impressed by evidence of a work ethic as they are with academic or athletic accolades.

What you can do with this

  • In little kids, the usual: Lemonade stands and collecting and redeeming recyclables. But, also, look around the house and figure out what labor they can subcontract from you — small hands can be surprisingly adept at certain cleaning tasks (like car detailing).
  • With older kids, don’t always prioritize academics over employment. Of course a balance needs to be struck, but recognize the value to their long-term prospects that a good part-time job provides. Also, it will save you money.

5. Don’t let your kids be ungrateful

Foster an understanding of different circumstances — Even if your kids want for nothing, it’s important that they’re exposed to other situations.

What you can do with this

  • If you don’t live in a socioeconomically diverse community, make the effort to ensure they meet kids from other backgrounds through sports, play dates and other activities.
  • Even if you’re not religious, make a ritual of articulating thankfulness at family meals. A secular version of grace isn’t going to assuage the wrath of any vengeful gods, but it’s just as good as a religious one for encouraging kids to reflect on their family’s good fortune.

This article originally appeared on Fatherly

More from Fatherly:

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Greece

Greece Promises to Eliminate Tax Evasion Amid Financial Troubles

Tax evasion has been rampant for generations in Greece

(ATHENS, Greece) — Dimitris Bokas keeps meticulous records of the bathroom fixtures he sells from his small shop in the quiet middle-class residential neighborhood of Koukaki near the center of Athens — just in case a tax inspector makes a surprise visit to ensure Greece’s 23 percent sales tax is being collected and reported correctly.

But Bokas also does installation and repair jobs — and half of those involve cash deals with no receipts for his labor. The result is that a job costing 250 euros ($275) goes for 125 euros because he doesn’t charge the client sales tax and Bokas doesn’t report the income for taxation. “I’ve got a receipt for everything I sell in my shop,” Bokas said. But tax officials “don’t know what my hands do.”

This kind of tax dodging is a Greek national pastime, costing the state billions of euros in revenue. Greece promised last week to get tough on tax evasion in return for a third European bailout expected to be negotiated over the next month. The talks, expected to last four weeks, will start if Parliament agrees by Wednesday to eurozone demands including tax hikes and pension cuts.

But experts say Greece has largely failed in previous crackdowns on tax evasion, which has been rampant for generations. An estimated 10 billion euros in taxes never makes it into government coffers annually.

Tax dodging among Greeks started as a sign of patriotism during nearly four centuries of Ottoman rule that ended in 1821. It continues today amid mistrust over government spending and disdain over how the country’s various administrations have handled Greece’s financial mess after the economy imploded in 2009.

“A lot of Greeks believe it’s not only a way to cheat the inefficient Greek government, but a way to exert small time resistance to the bailout agreement and tax hikes,” said Aristidis Hatzis, a professor of law and economics at Athens University. “They do not perceive this as a kind of corruption.”

Contributing to the problem is an informal economy that accounts for about 25 percent of Greece’s annual gross domestic product. Evasion is most common in the services sector where customers don’t receive a physical product, and it’s not limited to small businesses like plumbers and restaurants.

In monthly reports, Greece’s financial crimes unit lists finalized tax investigation cases and recent offenders include doctors, engineers, high tech firms, construction companies, clothing manufacturers, bakeries, architects and advertising agencies.

Many cases involve unreported income of hundreds of thousands of euros or more and one lawyer failed to report 16 million euros in income, the unit said in a statement last week.

But many cases go uninvestigated because of poorly trained tax investigators, personnel shortages and politically motivated appointments of tax investigation supervisors, said Haris Theoharis, who was Greece’s top tax enforcer until last year and is now a lawmaker with the centrist To Potami party.

Theoharis said it’s too soon to tell whether the governing far left Syriza party will mount an effective campaign against tax evasion because few specifics of its plans have been disclosed. He argued that freeing the system from political interference is key: “Unless they depoliticize the tax administration and stop trying to interfere with who gets promoted,” he said, “they will not have success.”

Nikolaos Artavanis, a finance professor at the University of Massachusetts at Amherst, said the government’s decision to raise the sales tax for restaurants as part of its offer in return for a bailout could prevent a tax evasion crackdown from working.

The rate is going from 6.5 percent to 13 percent for hotels and from 13 percent to 23 percent for restaurants and other businesses that sell food. Many Greek restaurant and hotel owners say they’ll be forced to absorb the hike because their clients can’t afford to pay more, and experts like Artavanis believe evasion could skyrocket.

“The fiscal impact could be zero or be negative because tax evasion will increase,” he said. “They could get less in taxes.”

More enforcement will be needed, but Artavanis said many parts of Greece rarely see a tax inspector. His research focuses on tax payments by Greek restaurants, and owners in some parts of the country have told him they have not had tax inspector visits since last August.

Bokas, the plumber and fixture vendor, said most of his customers who want no-tax jobs are apartment owners or small businesses. Larger businesses and big apartment buildings with on-site management always want a receipt for the work so they pay the full price, and Bokas collects the sales tax and pays tax on the work he does for those jobs.

He said would prefer to do all of his work legally but doubted there will be much change in Greece unless the entire country changes its habits. Unlike Greeks who distrust the government’s ability to effectively spend tax money, Bokas thinks officials should be given a chance to prove they can.

“Paying all the taxes we owe would be the right thing to do and it would help us have a healthier country,” he said. “If the tax were paid, the rich wouldn’t be able to get richer by evading taxes and the poor wouldn’t have to evade taxes so they can just get by.”

TIME Money

4 Roadblocks You Can Overcome for Your First Million Dollars

one-hundred-dollar-bills
Getty Images

Learn and understand how money works

Relaxing vacations on the French Riviera, huge donations to your favorite charity and an early retirement. These are the kinds of things people think of when they hear the word “millionaire.”

It’s unlikely you’ll ever experience that. Sorry.

Unless, of course, you can overcome the following four roadblocks stopping you from achieving millionaire status. Each roadblock below also offers an “immediate action step” to help you overcome the things holding you back. Let’s get started.

1. You don’t understand how money works.

Money is not a complicated topic, but still, few seem to really understand how it works. Do you? Sure, you can blame the school system or your parents, but the responsibility is still on you to figure out how money is made, how it is held, how it is invested and how it is preserved.

Millionaires understand that money is not something that is discovered, won, or created by chance.

As I stated in my previous column, 5 Powerful Books That Changed the Direction of My Life, wealth is not an accident, but an action. Building wealth is the world’s largest game, and if you want to win, you need to learn the rules. So start studying.

Immediate action step: Start by reading several great money books, such as:

  • Rich Dad, Poor Dad by Robert Kiyosaki
  • The Total Money Makeover by Dave Ramsey
  • The Richest Man in Babylon by George Clason

But don’t just read, internalize the knowledge. Debate it. Talk about it with your spouse, grandma and mail carrier. Personal finance can be learned, and by mastering it, you might discover that wealth is much easier to build than you previously thought.

2. You don’t value your education.

I get it: you are busy.

You have 25 hours of work to do every day and there simply isn’t enough time to get it all done. That’s the life of an entrepreneur, so something needs to be sacrificed. Chances are, you are sacrificing your continuing education, and it’s severely hurting your chances of becoming a millionaire. Wealthy people never stop learning, despite the business in their life.

In a recent interview on The Tim Ferriss Show, Noah Kagan says he takes time every morning to read, as well as setting aside time every Tuesday morning to simply learn.

When is the last time you scheduled “learning time”? Do you just try to “fit it in” when everything else is caught up?

Follow the advice of Kagan, Ferriss and other incredibly successful entrepreneurs: never stop learning, no matter how busy you are.

Immediate action step: Listen to the interview with Noah Kagan on The Tim Ferriss Show. Trust me — it’ll get you far closer to millionaire status than those TPS reports you were planning on working on today.

3. You live to your means.

What are you doing with your extra money each month?

I know, you probably don’t have any left over. Your boss doesn’t pay you enough. Your company hasn’t taken off yet. Or whatever other excuse you have. But let’s face it: you are spending too much money. I don’t care how much you make — it doesn’t matter. Everyone lives to their means. You could make $2,000 per month or $20,000 per month and you’ll still be broke.

The millionaires I know have made a conscious decision to live on less than they make. Instead of upgrading their life every time they make more money, they choose to put that extra cash to work for them through various investments, such as their business, stocks, real estate or other assets, which I’ll talk about next.

Immediate action step: Pull out your bank account statements for the past three months. Figure out where every single dollar went, organizing the entire list into categories. Then, create a solid budget for your future. If budgeting is difficult for you, I’d recommend YouNeedABudget. Also, read The Simple Action No One Does That Will Make You A Millionaire. That blog post alone might just make you a millionaire, someday.

4. You don’t collect assets.

A job will never make you rich. Neither will saving all your cash in a coffee can. So how can you build that wealth?

Start collecting assets.

An asset, as defined by Investopedia.com, is “a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.”

Millionaires collect assets. It’s as simple as that. Do you?

An asset could be a profitable business, a growing stock portfolio orinvesting in the right piece of real estate (not all real estate is a good investment. It’s what you do with it that matters.)

Your car is not an asset. That shiny new electronic gadget on your arm is not an asset. Your home might not even be an asset. These are allliabilities that are robbing you of future wealth.

Stop collecting these, and start collecting things that will make you money in the long term.

Immediate action step: Make a detailed list of all the assets in your life, as well as their current value. Are you comfortable with this list? Then, make a detailed plan to acquire more assets and make a pact with yourself to NOT buy so many liabilities.

Becoming a millionaire is not impossible. In fact, it’s relatively easy when you have time on your side and the knowledge to do so.

However, it does require overcoming hurdles, which can be tough. If you want to achieve a million dollars in net worth, or more, continue to learn about the game of money, value your education, live below your means and start collecting assets. You’ll get there soon enough!

This article originally appeared on Entrepreneur.com

More from Entrepreneur.com:

TIME world affairs

Greece Doesn’t Need a Bailout—It Needs Investors

The global financial system needs to look beyond loans if it wants to avoid future train wrecks when financing growing nations

Greek negotiators and their European counterparts have blinked, having tiptoed up to the cliff of European disunion, looked down, and decided not to take the plunge. Global markets have collectively exhaled in relief as a result of a deal arrived at over the weekend that buys Greece more time to turn things around and pay its debts.

What’s depressing is that we will likely see this drama play itself out again, as we have before, whether or not the actors on stage are Greece and the European Union, or some other over-indebted nation and its creditors. There may be elements to this story that are particular to the dynamics of the Eurozone, to be sure, but there is a more fundamental, less discussed, problem that needs resolving: the excessive reliance of nations on debt as a means of financing their development.

The Greek debt crisis is so similar to other debt crises of the past it’s haunting. Developing countries load up on loans from over-eager banks and other creditors based on rosy growth projections that do not materialize. Unable to meet their repayment obligations, they default or seek debt forgiveness. If the crisis is big and systemic, other governments and multilateral financial institutions (in this case, the European Central Bank and the International Monetary Fund) bail out banks trying to prevent a financial crisis that may cause large economic disruption. Pundits on both sides make loud noises. There is a usually a “moral hazard” camp arguing against any bailouts, opposed by an “extraordinary times require extraordinary measures” faction eager to do what it takes to avoid ruinous financial contagion. Rewind, pause, repeat. The pattern is all too familiar and a bit too frequent.

The fundamental problem is an excessive reliance on debt as the method to finance public spending. Such inflexible IOU’s shouldn’t be the only means available for sovereign nations to raise capital to invest in their growth and development. Like enterprises in the private sector, sovereign states should also be able to raise equity funding, which involves selling a stake in their future to investors eager to participate in, and benefit from, their success. This would give these states more room to maneuver when times get tough, and give their creditors a better return when things go well.

Consider the differences between Greece and Uber. If Uber wants to raise money to finance its expansion, it can go to a bank to seek a loan, or it can sell that equity stake to investors willing to share both the upside and downside risk, aligning their interests with those of the company. Short of selling shares in individual state-owned enterprises, there are surprisingly few avenues for sovereign nations and investors to partner up, and there is no good reason for Uber and other start-ups to have more financing options than an emerging sovereign nation does.

A traditional loan requires a fixed repayment, regardless of circumstances. Sure, different borrowers, including governments, pay different interest rates depending on their track record and prospects, but essentially once a debt is contracted, they do not repay more if outcomes exceed expectations, and their liabilities aren’t diminished if things sour. Lenders have generally looked to government debt as a relatively safe, conservative investment, which is why so many pension funds and individual investors in this country choose to invest in municipal bonds and Treasury bills.

That’s the theory, of course, but as the Greek case shows, the international financial system has gone too far in privileging debt over other financing options, with utterly predictable results. Once again, creditors and borrowers — not to mention the people of Greece and elsewhere in Europe who weren’t in on the decision to enter into these agreements — are entangled in a messy, time-consuming, and destabilizing drama emanating from a supposedly unimaginable default. Equity-like deals, where investors fully become invested in a country’s fate, are often made only after a costly default process, when some investors acquire “bad debt,” after a default. The value of the bad debt can rise and fall dramatically, depending on a nation’s performance. For instance, after defaults by Latin American countries, such as Argentina, in the 1980s, these countries’ old debt obligations were swapped for what were called “Brady Bonds,” which allowed investors to trade the debt for other financial instruments at deep discounts from their contractual values. The market values of Brady Bonds rose and fell with the economic performance of these countries, which means investors and sovereign debtors’ interests became somewhat aligned.

It would be far better to design an equity-like, risk-sharing arrangement between sovereign states and creditors from the outset, in which the required repayment were automatically lowered in bad times and scaled up in good times. For example, the repayments could be linked GDP growth, or to market prices of commodities that a country exports.

Finding new ways to package and sell risk-sharing equity stakes in a nation’s future would better align the interests of sovereign borrowers and its foreign or domestic creditors. The concern that countries receiving equity capital might be tempted to minimize their resources or performance to lighten their obligations, is likely not relevant for small, growing countries. The consequences for reporting bad outcomes frequently would cause investors to lower their expectations of countries’ potential for growth and thus lower the valuation of their assets when any future financing is being negotiated. The hit that a country’s reputation would take for inaccurate reporting would simply be too high.

We should think of small, growing countries such as Greece (whose performance was healthy prior to the financial crisis, recession, and austerity of recent years) the way we think of promising, but volatile, tech start-ups. They should be financed with less debt, and more equity, perhaps even with riskier options — like stock-call options that are worth zero when performance is poor, but deliver outsized returns when things go well. This more diversified approach to sovereign financing would provide growing nations with natural shock absorbers. Their creditors would profit handsomely in good years, but countries like Greece would conversely benefit from some relief in bad years, as opposed to forcing a crash of the international financial system on account of a debt straightjacket they have forced themselves into.

In the meantime, regardless of what happens in Greece, a continued overreliance on debt to finance the expansion of developing economies will only mean that the next time—and there will be a next time—will be no different.

Bhagwan Chowdhry is a professor of finance at the UCLA Anderson School of Management and co-founder of the Financial Access at Birth initiative. His website is http://bit.ly/bhagwan

TIME Economy

Why Greece Matters for Everyone

Like it or not, Greece is a domino that will have ripple effects throughout the rest of the world

Greece is a tiny country. It’s 0.3 % of the GDP of the world. Most private creditors took their money out of the debt-ridden nation years ago. So why is the possible exit of Greece from the Eurozone rocking markets? Because it represents what could be the end of the biggest, most benevolent experiment in globalization, ever.

On Sunday, Greek voters said “no” to Europe’s latest bailout offer. That means that a Greek exit from the Eurozone is now very likely–most analysts are putting the odds at somewhere around 60%-70% at this point. For Greeks, the next few weeks will be chaotic. Banks are closed; last week, people could take only 60 euros at a time out of ATM machines, this week it may go to as little as 20 euros. Merchants have begun eschewing credit cards in favor of hard currency as a cash hoarding mindset kicks in.

Global markets are not surprisingly down on the news and will likely be quite jittery for the next few weeks. It’s not that the economy of Greece itself matters so much–China creates a new Greece every six weeks–it’s that a Greek exit from the Eurozone calls into question the entire European experiment. Europe was always an exercise in faith: 19 countries coming together to form a made-up currency without any common fiscal policy or true political integration seemed like a great idea in good times, but was destined to be fragile in bad times.

MORE: Here’s What Greek Austerity Would Look Like in America

The risk now is that a chaotic Greek exit from the Eurozone starts to undermine faith in other peripheral countries, like Italy or Spain. Watch what their bond spreads do over the next few days. If they rise a lot, it means investors are worried. While ECB head Mario Draghi has promised money dumps to help stabilize these nations and any other Eurozone countries that need help (perhaps we should start calling him “Helicoper” Mario), he can’t stop the euro from falling against the dollar, or keep investors from fleeing to “safe havens” like US T-bills. That might be good for US bond markets, but Europe’s crisis could also impact the Fed’s ability to raise interest rates in September, which until quite recently seemed like a sure thing.

No wonder President Obama and Jack Lew are getting vocal about it all–while this isn’t going to be a Lehman Brother’s style domino collapse of financial institutions (private creditors represent only about 12 % of Greek debt; most got their money out back in 2011 or 2012), there’s little question that Europe’s growth will slow, which will affect US companies and workers. The stronger dollar will also hurt US exporters.

But even more important than the short-term jitters are the longer-term economic and geopolitical impacts of the Eurozone crisis. One of the reasons that Russia has been so aggressive in places like the Ukraine is that Europe is perceived as being weak, unable to make the political integrations that would actually solve this debt crisis permanently. (That would require creating a real United States of Europe–something that requires German buy in.)

MORE: Greece Says ‘No’ to Austerity

The Greeks may think that a “no” vote to Europe has increased their power to bargain for a third bailout, but I think it will be very hard to convince German voters of that (and any deal will have to pass through the Bundestag). Germans simply don’t understand why the rest of Europe can’t be more like them, despite the fact that the math doesn’t really work.

If Greece is left on its own, where will it turn for support? To Russia, China, and any number of countries in the Middle East. Suddenly, you’ve got the stability of the Balkans in play. And as it becomes clear that the future of the world’s second largest reserve currency isn’t necessary a given, that could weaken investment in Europe as a whole, throw the Eurozone back into recession, and undermine the EU on the world stage. A political bloc that can’t guarantee its own currency will also have reduced clout in any kind of political negotiation. Europe’s weakness could be very destabilizing at a time when America’s own geopolitical power has ebbed.

That’s bad news for everyone. Europe is one of the three legs of the global economic stool, along with the U.S. and China, which is in the middle of its own debt crisis. America’s recovery isn’t strong enough to pull the world along. Europe’s debt crisis is not only an economic crisis but also a political crisis–one that poses challenges not just the EU itself, but liberal democracy as the model of the future.

MORE: Greek Finance Minister Resigns

TIME twitter

Twitter’s Dick Costolo: Wall Street ‘Accelerates Short-term Thinking’

Twitter CEO Costolo and Twitter co-founder Dorsey walk the floor of the New York Stock Exchange during Twitter's IPO in New York
© Lucas Jackson / Reuters—REUTERS Dick Costolo

Former Twitter leader discusses pressures of going public

Twitter going public proved to be a tougher task than former CEO Dick Costolo initially expected.

The exec, who finishes his post atop the popular social media service on Wednesday, said in an interview with The Guardian that the pressures of meeting Wall Street expectations were severe.

“When we took the company public, I had an expectation that the market would evaluate us based on our financial metrics first and foremost,” he told the publication. “I probably would frame the way we were thinking about the future of the company differently, understanding how we were in retrospect evaluated.”

Costolo added: “You always want to keep focused on the long-term vision, yet when you go public you’re on a 90-day cadence and there’s a very public voting machine of the stock price that accelerates that short-term thinking.”

There’s an ongoing search to find the next CEO of Twitter; co-founder Jack Dorsey will lead the company in the interim. Costolo stepped down from the top spot unexpectedly earlier this year.

Costolo spoke with Fortune’s Christopher Tkacyzk in April to about his thoughts on leadership and free speech in the workplace.

Your browser is out of date. Please update your browser at http://update.microsoft.com